The PlayStation 3 gaming console comes with a slew of functionality above and beyond that of a traditional game system. One feature involves the ability to watch video files from a USB drive. You can watch an .ISO file straight from a USB using the PlayStation 3. The .ISO file simply creates a burnt version of a DVD or Blu-ray. The PS3 will treat the .ISO file as a normal Blu-ray disk.
Turn on your PlayStation 3. Let the system boot up to the menu.
Plug your USB into the USB drive. You can locate the USB drive on the front of the PlayStation 3 gaming console. It can be found in the lower left hand corner of the machine.
Use your controller to scroll over to "Video" from the PS3 menu. Push "X." Scroll down to "USB Device." Press "X." Select the Blue-Ray .ISO file and press "X." You can now watch the Blu-ray on your PS3.