For PSN exclusives, PS2 Classics, and indie games – use PKG. For AAA disc-based games like Red Dead Redemption – use ISO or Folder format for better compatibility.

When he rebooted, the PKG was gone. So was every other game he’d installed. Only the factory XMB remained, clean as 2006.

: Use software to chop the PKG into smaller chunks that FAT32 accepts; the PS3 will "rebuild" them during installation. ⚠️ Key Reminders

If you are looking for specific titles that shine in this format, these are widely considered the "must-haves" for any PS3 library: The PS3HEN 4.92 Guide Has Arrived! Get It Here