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1. You need an HD TV.
2. As long as its an HD TV, just put the disc in and you're good.
3. I'm almost positive there's an option for subtitles in the menu, not sure where tho
Put in a blu ray movie and it will work. If you're referring to watching mp4 videos then no, you can't do that. Even the PS3 didn't have subtitle support if I remember correctly. Maybe you could buy the movie off PSN and it will have subs.