One of the most popular file-formats for playback of movies right now is MKV / x.264
We think this format is similar like the early stages of MP3 development. You could use it, but there was very little support for it.
If you playback MKV content at 1080P, you'd need a fairly decent PC to maker that happen, as this type of content is not supported by software like PowerDVD.
How would you like to learn to playback MKV / x.264 content 98% accelerated by your Radeon of GeForce graphics card ? And we'll even go a step further, optimize image quality with the help of your graphics card shader processors ?
Guru3D wrote up a guide on how to make this happen, guide explaining you what you need to do to get that MKV / x.264 GPU accelerated content going.
Read more at Guru3D.