[Windows Phone 7 Q&A, Help & Troubleshooting] wheresmybeaver:
If you serve up compatible (ie MP4 or WMV) files via http to the WP7 browser then these will apparently open the Zune player on the phone and the content will stream. I have not tried this yet myself however.

What I am planning on doing this weekend though is trying out TVersity (google is your friend). From what I can see, this software runs a server that allows you to access all your media (music, photos, video etc) from phones, other PCs, media players etc. It has the major advantage of optionally converting file formats on the go.

What I'm hoping to do with this is:

1. Set up TVersity server on my home HTPC

2. Browse my media collection using the TVersity server with IE on my WP7 (this tutorial suggests this should be possible)

3. Clicking on MP4 files should play them natively with the Zune software on the phone, and other formats should be converted to MP4 on the fly by TVersity (need to look into TVersity to make sure it can actually do this!)

4. Play files

5. ???

6. Profit!

I'm going to try this with the free version of TVersity first to make sure it works as I think it does. If it does, great. If not, I'm stuck converting my AVIs to MP4 and copying them to my phone. Also try out "Send to WP7"; the latest update allows you to right-click an MP4 on your desktop and send a local link to your phone so you can stream directly over Wifi.

But really somebody should make a server / app combo for WP7 that serves up media nice and easy.

EDIT: I've actually tried the above, and it works. You can access TVersity if you're connected by Wifi with your IP address (http://192.168.1.9:4321 or whatever) and you are provided a file browser to browse all your media. Selecting a video file automatically transcoded the AVI to WMV which looks pixel perfect and very good quality (widescreen and all) on my HD7. It opens in Zune player, so all you can really do is pause / play, fast forward and rewind. No scrubbing or anything.

Positives:

-Allows you to play any AVIs / divx videos in your library without converting beforehand

-Streaming quality is perfect and smooth

-Possible to stream over the internet (3G) if you want (you can set a username and password)

Negatives:

-TVersity menu looks poor on the phone and is difficult to navigate; some text is huge while other text is tiny

-Once you start streaming a TV show / Movie, there is no way of stopping the transcoding at the server side. ie If you start watching a 40 minute 350mb show but decide after a few seconds you want to watch another one, TVersity doesn't seem to have any way of telling that you've navigated away from the show. Which means that the server computer running TVersity and doing the transcoding (which is my case is an oldish laptop in a cupboard) will continue to transcode the entire episode for the duration of the show. This has the very unwelcome side effect of almost maxing out the CPU on the server for those 40 minutes. And if you start watching another episode, that starts transcoding too... server is crippled after a while. The only way to stop transcoding is by manually restarting the TVersity service on the server, which cannot be done remotely.

In fairness the issues here are not caused by WP7, they seem to be TVersity issues. I thnk they would be easily fixed with an official TVersity browser app that would solve the navigation issues and would tell the server to stop transcoding when you quit watching a video.

On the other hand, we wouldn't have these issues if WP7 would just support AVI / divx like they promised they would originally... ;-)