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While there are different ways of watching AVI and MKV video files on the iPad, I use the Air Video app.
I just leave all the AVI and MKV files on my home machine (technically a Drobo connected to my home machine) and transcode them on the fly with Air Video while streaming to my iPad.
It's much faster than transferring or syncing files and saves a lot more space than storing them locally on my computer.
Anyone use a different method to watch AVI and MKV files on their iPad? Any big advantages to doing it locally?