Here's the breakdown:

Blu-ray Profile 2.0, BD-LIVE:
- Blu-Ray discs will support additional downloadable video content, ringtones, games, and more.
- Interactive movie-based games that support local or online play.
- The first movies to support BD-LIVE will be Sony Pictures Home Entertainment's The 6th Day and Walk Hard, available on April 8, 2008. (US)

Other PLAYSTATION 3/PSP enabled features:
- Expanded media sharing with PSP: Copy Photos and Music to PlayStation Portable (PSP), from PLAYSTATION 3.
- Resume play feature allows PLAYSTATION 3 to continue playing a DVD or Blu-ray disc (BD) from the last point stopped, even if the disc was ejected.
- Remote Play will be updated to support "Audio Output Device," allowing PSP to be used as a remote control without having the need to turn on TV.
- PLAYSTATION 3's Internet Browser's viewing speed will be increased and video files on web pages will be streamed.
- [Save Target] has been added as an option under file.
- DivX and WMV format videos greater than 2GB are now supported.
- New AV feature for DVD/BD: "Mosquito Noise Reduction”

No specific release date on System Update (aka firmware update) 2.20 was given, but it is expected to be available "within the next few days."

UPDATE 3/25/08: System Update 2.20 is now available. See here for more.

From SCEE and SCEA

SCEE Press release:

Interactive Movies Come to Life on PLAYSTATION®3 with System Software Update Version 2.20
Downloadable Movie Content and Interactive Games, available with BD-LIVE PS3™’s Interoperability with PSP™(PlayStation®Portable) Enhanced

London, 20th March 2008 – Sony Computer Entertainment Europe (SCEE) today announced that system software update v.2.20, for PLAYSTATION®3 (PS3™), planned for release in late March, will add Blu-ray Disc™ (BD) Profile 2.0 (known as BD-LIVE). With the ability to take full advantage of interactive features, such as downloadable video content, ringtones, games, and more, BD-LIVE promises to offer PS3 users the ultimate interactive film experience. In addition to BD-LIVE, the system software update will enable photo and music playlists on a PS3 to be copied to a PSP™(PlayStation®Portable), as well as other new features.

To access Blu-ray Profile 2.0, users require an Internet connection and at least 1GB of local storage. Movies with BD-LIVE are scheduled for release next month.

The following features have been demonstrated to be possible with BD-LIVE and will vary depending on the title:

· A variety of downloadable content, including bonus scenes, shorts, trailers, subtitles, ringtones that can be sent to mobile phones, images, and more.

· Interactive movie-based games can pit players who are sitting in the same room, or are across the world and online, against each other.

In addition to BD-LIVE, system software update v.2.20 enhances PS3’s relationship with PSP, enabling users to copy their favourite music and photo playlists to their PSP and experience them on-the-go. This new functionality makes it easer than ever to share media content between the two systems.

The following new features will also be included in the system software update:

· “Resume play” will enable PS3 to start playing a BD and DVD video at the point it was stopped, even if the disc had been removed.*1

· “Audio Output Device” will be a new Remote Play setting, enabling PSP to serve as a remote control for music played through PS3.

· PS3’s Internet browser will be enhanced: Video files directly linked from a Web page will be able to be streamed, and the browser’s view speed will be improved.

· DivX and WMV format videos that are larger than 2GB will be playable.

· “Mosquito Noise Reduction” will be added as an AV setting in the control panel of the DVD/BD player for improved movie playback.*2

*1 BD-J format disc is not supported.

*2 BD discs recorded with BDMV format are not supported.

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