"The Playstation 3’s Blu-ray disc player will work entirely through software decoding, thanks to the power of the console’s Cell processor. Sony recently demonstrated the PS3’s Blu-ray playback capabilities at CES 2006, showing some impressively smooth 1080p footage.
Although the software-decoded Blu-ray disc player is driven by the Cell processor, the image processing is driven by the PS3’s powerful RSX “Reality Synthesizer” graphics chip.
At this stage, the Playstation 3 console supports 12-bit HDMI output. However, Sony president Ken Kutaragi hinted that 16 bit HDMI for the Playstation 3 may not be far away, saying that,
“I would like 16 bit [HDMI support] if possible, but at least 12-bit.”
A consortium of seven companies is currently aiming to release a 16-bit HDMI standard before mid-2006, and it may be that Kutaragi-san is planning to incorporate this standard into Sony’s next-generation console." [link