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It's time to play good news, bad news.
Good news: Sony's releasing a portable TV service for the PSP.
Bad news: It's in Japan only (for now).
Good news: Some video is going to come in native 16:9 resolution.
Bad news: It's DRM protected and you'll only have a limited time (5 to 30 days) to watch. After that, you need to pay again.
Good news: Some content is free.
Bad news: You need to be using firmware 2.60 or above, which means no more home-brew until a new hack is released.
Even more bad news: Shows are limited for now, and many are costly. 189 Yen for a 30 minute episode of a Korean drama that you can only watch for 5 days, and 315 Yen for a Gundam 2 hour movie that you can watch for 7 days are two examples.

The bottom line is, Sony's DRM and pricing scheme may prevent this from taking off even in Japan, let alone in the US.

A look at Sony's Portable TV service for PSP [JapanChronicles]