XBox 360 + Media Center Extender
 

Since I only watch a handful of shows and can't really justify paying what I pay, I'm on a quest to rid myself of cable TV by setting up a central Media Server and streaming content to pretty much any TV to the house. Figure I could just download the shows I watch via TVRSS.

Enter the 360 and the Media Center connection capabilities!

Media Center itself, when connected directly to a TV, can pretty much play any type of video file - AVI, MPEG, etc.

However, when the 360 connects to the media center and pipes over the menu, it is unable to play any video file other than MPEG or WMV (maybe a few others, but AVI is outta the question).

I know there's probably a stupid license issue for the reason of there not being a codec in the 360, but apparently the bright ones at MS didn't even fathom the concept of allowing us to specify or add-in our own. Thanks, Microsoft...

So my question is: how can I take an AVI, or any movie file whatsoever, and play it on the 360 via Media Center? I know there are 3rd party apps like Encode 360, but I'd rather keep it all central in Media Center and have there be some type of dynamic conversion.

Is there a way to convert it to mpeg/wmv without losing quality? If I have to, I'll write a program to batch convert all the shows/movies I download that are in AVI and turm them to MPEG, or a format that's at least readable by the 360.