Everything you throw at this baby will play nicely. I've tried everything, MPGs, xvid, Divx, it always plays perfectly and without a glitch. I never had to convert anything I got from the net. I only converted my own DVDs (into Divx).The plus side is that all the videos look very nice in the screen, even those that don't look very good on the TV. The screen is large enough for the watching to be pleasant.The small loudspeaker makes it ideal to use it with your kids on car trips or, like I do sometimes with my 4-year old, when he is eating.It is a life saver, if you, like me, had to go thru 5 hours of flight. I just watched 5 episodes of Heroes.No, it is not a small ipod to take to the gym. It is more an alternative to a portable DVD player, with the advantage that you don't have to convert anything and you can carry 30 full-length movies or 80 TV episodes in it.