diff --git a/Core/HLE/sceMpeg.cpp b/Core/HLE/sceMpeg.cpp
index add9a722a5c7..f2a6feda619c 100644
--- a/Core/HLE/sceMpeg.cpp
+++ b/Core/HLE/sceMpeg.cpp
@@ -337,7 +337,6 @@ static void AnalyzeMpeg(u8 *buffer, MpegContext *ctx) {
 			// TODO: Does this make any sense?
 			ctx->mediaengine->loadStream(buffer, ctx->mpegOffset, 0);
 		}
-		ctx->mediaengine->setVideoDim();
 	}
 	
 	// When used with scePsmf, some applications attempt to use sceMpegQueryStreamOffset
diff --git a/Core/HLE/sceMpeg.h b/Core/HLE/sceMpeg.h
index b4a173d70503..013e5a7b295c 100644
--- a/Core/HLE/sceMpeg.h
+++ b/Core/HLE/sceMpeg.h
@@ -42,6 +42,9 @@ static const int PSMF_STREAM_SIZE_OFFSET = 0xC;
 static const int PSMF_FIRST_TIMESTAMP_OFFSET = 0x54;
 static const int PSMF_LAST_TIMESTAMP_OFFSET = 0x5A;
 
+static const int PSMF_VIDEO_STREAM_ID = 0xE0;
+static const int PSMF_AUDIO_STREAM_ID = 0xBD;
+
 struct SceMpegAu {
 	s64_le pts;  // presentation time stamp
 	s64_le dts;  // decode time stamp
diff --git a/Core/HLE/scePsmf.cpp b/Core/HLE/scePsmf.cpp
index 45945a435713..62bfd19850cf 100644
--- a/Core/HLE/scePsmf.cpp
+++ b/Core/HLE/scePsmf.cpp
@@ -33,8 +33,6 @@
 #include <algorithm>
 
 // "Go Sudoku" is a good way to test this code...
-const int PSMF_VIDEO_STREAM_ID = 0xE0;
-const int PSMF_AUDIO_STREAM_ID = 0xBD;
 const int PSMF_AVC_STREAM = 0;
 const int PSMF_ATRAC_STREAM = 1;
 const int PSMF_PCM_STREAM = 2;
diff --git a/Core/HW/MediaEngine.cpp b/Core/HW/MediaEngine.cpp
index e0b47b74e383..ba57de76549e 100644
--- a/Core/HW/MediaEngine.cpp
+++ b/Core/HW/MediaEngine.cpp
@@ -168,7 +168,7 @@ void MediaEngine::closeMedia() {
 }
 
 void MediaEngine::DoState(PointerWrap &p) {
-	auto s = p.Section("MediaEngine", 1, 4);
+	auto s = p.Section("MediaEngine", 1, 5);
 	if (!s)
 		return;
 
@@ -181,6 +181,11 @@ void MediaEngine::DoState(PointerWrap &p) {
 	} else {
 		m_mpegheaderSize = sizeof(m_mpegheader);
 	}
+	if (s >= 5) {
+		p.Do(m_mpegheaderReadPos);
+	} else {
+		m_mpegheaderReadPos = m_mpegheaderSize;
+	}
 
 	p.Do(m_ringbuffersize);
 
@@ -194,8 +199,6 @@ void MediaEngine::DoState(PointerWrap &p) {
 	u32 hasopencontext = false;
 #endif
 	p.Do(hasopencontext);
-	if (hasopencontext && p.mode == p.MODE_READ)
-		openContext();
 	if (m_pdata)
 		m_pdata->DoState(p);
 	if (m_demux)
@@ -209,6 +212,10 @@ void MediaEngine::DoState(PointerWrap &p) {
 		p.Do(m_lastTimeStamp);
 	}
 
+	if (hasopencontext && p.mode == p.MODE_READ) {
+		openContext(true);
+	}
+
 	p.Do(m_isVideoEnd);
 	bool noAudioDataRemoved;
 	p.Do(noAudioDataRemoved);
@@ -219,8 +226,7 @@ void MediaEngine::DoState(PointerWrap &p) {
 	}
 }
 
-int _MpegReadbuffer(void *opaque, uint8_t *buf, int buf_size)
-{
+static int MpegReadbuffer(void *opaque, uint8_t *buf, int buf_size) {
 	MediaEngine *mpeg = (MediaEngine *)opaque;
 
 	int size = buf_size;
@@ -228,8 +234,6 @@ int _MpegReadbuffer(void *opaque, uint8_t *buf, int buf_size)
 		size = std::min(buf_size, mpeg->m_mpegheaderSize - mpeg->m_mpegheaderReadPos);
 		memcpy(buf, mpeg->m_mpegheader + mpeg->m_mpegheaderReadPos, size);
 		mpeg->m_mpegheaderReadPos += size;
-	} else if (mpeg->m_mpegheaderReadPos == mpeg->m_mpegheaderSize) {
-		return 0;
 	} else {
 		size = mpeg->m_pdata->pop_front(buf, buf_size);
 		if (size > 0)
@@ -238,33 +242,73 @@ int _MpegReadbuffer(void *opaque, uint8_t *buf, int buf_size)
 	return size;
 }
 
-bool MediaEngine::openContext() {
+bool MediaEngine::SetupStreams() {
+#ifdef USE_FFMPEG
+	const u32 magic = *(u32_le *)&m_mpegheader[0];
+	if (magic != PSMF_MAGIC) {
+		WARN_LOG_REPORT(ME, "Could not setup streams, bad magic: %08x", magic);
+		return false;
+	}
+	int numStreams = *(u16_be *)&m_mpegheader[0x80];
+	if (numStreams <= 0 || numStreams > 8) {
+		// Looks crazy.  Let's bail out and let FFmpeg handle it.
+		WARN_LOG_REPORT(ME, "Could not setup streams, unexpected stream count: %d", numStreams);
+		return false;
+	}
+
+	// Looking good.  Let's add those streams.
+	const AVCodec *h264_codec = avcodec_find_decoder(AV_CODEC_ID_H264);
+	for (int i = 0; i < numStreams; i++) {
+		const u8 *const currentStreamAddr = m_mpegheader + 0x82 + i * 16;
+		int streamId = currentStreamAddr[0];
+
+		// We only set video streams.  We demux the audio stream separately.
+		if ((streamId & PSMF_VIDEO_STREAM_ID) == PSMF_VIDEO_STREAM_ID) {
+			AVStream *stream = avformat_new_stream(m_pFormatCtx, h264_codec);
+			stream->id = 0x00000100 | streamId;
+			stream->request_probe = 0;
+			stream->need_parsing = AVSTREAM_PARSE_FULL;
+			// We could set the width here, but we don't need to.
+		}
+	}
+
+#endif
+	return true;
+}
+
+bool MediaEngine::openContext(bool keepReadPos) {
 #ifdef USE_FFMPEG
 	InitFFmpeg();
 
 	if (m_pFormatCtx || !m_pdata)
 		return false;
-	m_mpegheaderReadPos = 0;
+	if (!keepReadPos) {
+		m_mpegheaderReadPos = 0;
+	}
 	m_decodingsize = 0;
 
-	u8* tempbuf = (u8*)av_malloc(m_bufSize);
+	m_bufSize = std::max(m_bufSize, m_mpegheaderSize);
+	u8 *tempbuf = (u8*)av_malloc(m_bufSize);
 
 	m_pFormatCtx = avformat_alloc_context();
-	m_pIOContext = avio_alloc_context(tempbuf, m_bufSize, 0, (void*)this, _MpegReadbuffer, NULL, 0);
+	m_pIOContext = avio_alloc_context(tempbuf, m_bufSize, 0, (void*)this, &MpegReadbuffer, nullptr, nullptr);
 	m_pFormatCtx->pb = m_pIOContext;
 
 	// Open video file
     AVDictionary *open_opt = nullptr;
     av_dict_set_int(&open_opt, "probesize", m_mpegheaderSize, 0);
-	if (avformat_open_input((AVFormatContext**)&m_pFormatCtx, NULL, NULL, &open_opt) != 0) {
+	if (avformat_open_input((AVFormatContext**)&m_pFormatCtx, nullptr, nullptr, &open_opt) != 0) {
 		av_dict_free(&open_opt);
 		return false;
 	}
 	av_dict_free(&open_opt);
 
-	if (avformat_find_stream_info(m_pFormatCtx, NULL) < 0) {
-		closeContext();
-		return false;
+	if (!SetupStreams()) {
+		// Fallback to old behavior.
+		if (avformat_find_stream_info(m_pFormatCtx, NULL) < 0) {
+			closeContext();
+			return false;
+		}
 	}
 
 	if (m_videoStream >= (int)m_pFormatCtx->nb_streams) {
@@ -290,8 +334,6 @@ bool MediaEngine::openContext() {
 	setVideoDim();
 	m_audioContext = new SimpleAudio(m_audioType, 44100, 2);
 	m_isVideoEnd = false;
-	m_mpegheaderReadPos++;
-	av_seek_frame(m_pFormatCtx, m_videoStream, 0, 0);
 #endif // USE_FFMPEG
 	return true;
 }
@@ -354,8 +396,7 @@ int MediaEngine::addStreamData(const u8 *buffer, int addSize) {
 #ifdef USE_FFMPEG
 		if (!m_pFormatCtx && m_pdata->getQueueSize() >= 2048) {
 			m_mpegheaderSize = m_pdata->get_front(m_mpegheader, sizeof(m_mpegheader));
-			int mpegoffset = (int)(*(s32_be*)(m_mpegheader + 8));
-			m_pdata->pop_front(0, mpegoffset);
+			m_pdata->pop_front(0, m_mpegheaderSize);
 			openContext();
 		}
 #endif // USE_FFMPEG
@@ -418,8 +459,7 @@ bool MediaEngine::setVideoStream(int streamNum, bool force) {
 		}
 
 		// Open codec
-		AVDictionary *optionsDict = 0;
-		if (avcodec_open2(m_pCodecCtx, pCodec, &optionsDict) < 0) {
+		if (avcodec_open2(m_pCodecCtx, pCodec, nullptr) < 0) {
 			return false; // Could not open codec
 		}
 		m_pCodecCtxs[streamNum] = m_pCodecCtx;
@@ -451,11 +491,19 @@ bool MediaEngine::setVideoDim(int width, int height)
 	}
 
 	// Allocate video frame
-	m_pFrame = av_frame_alloc();
+	if (!m_pFrame) {
+		m_pFrame = av_frame_alloc();
+	}
 
 	sws_freeContext(m_sws_ctx);
 	m_sws_ctx = NULL;
 	m_sws_fmt = -1;
+
+	if (m_desWidth == 0 || m_desHeight == 0) {
+		// Can't setup SWS yet, so stop for now.
+		return false;
+	}
+
 	updateSwsFormat(GE_CMODE_32BIT_ABGR8888);
 
 	// Allocate video frame for RGB24
@@ -523,14 +571,9 @@ bool MediaEngine::stepVideo(int videoPixelMode, bool skipFrame) {
 		return false;
 	if (!m_pCodecCtx)
 		return false;
-	if ((!m_pFrame)||(!m_pFrameRGB))
+	if (!m_pFrame)
 		return false;
 
-	updateSwsFormat(videoPixelMode);
-	// TODO: Technically we could set this to frameWidth instead of m_desWidth for better perf.
-	// Update the linesize for the new format too.  We started with the largest size, so it should fit.
-	m_pFrameRGB->linesize[0] = getPixelFormatBytes(videoPixelMode) * m_desWidth;
-
 	AVPacket packet;
 	av_init_packet(&packet);
 	int frameFinished;
@@ -551,7 +594,15 @@ bool MediaEngine::stepVideo(int videoPixelMode, bool skipFrame) {
 
 			int result = avcodec_decode_video2(m_pCodecCtx, m_pFrame, &frameFinished, &packet);
 			if (frameFinished) {
-				if (!skipFrame) {
+				if (!m_pFrameRGB) {
+					setVideoDim();
+				}
+				if (m_pFrameRGB && !skipFrame) {
+					updateSwsFormat(videoPixelMode);
+					// TODO: Technically we could set this to frameWidth instead of m_desWidth for better perf.
+					// Update the linesize for the new format too.  We started with the largest size, so it should fit.
+					m_pFrameRGB->linesize[0] = getPixelFormatBytes(videoPixelMode) * m_desWidth;
+
 					sws_scale(m_sws_ctx, m_pFrame->data, m_pFrame->linesize, 0,
 						m_pCodecCtx->height, m_pFrameRGB->data, m_pFrameRGB->linesize);
 				}
diff --git a/Core/HW/MediaEngine.h b/Core/HW/MediaEngine.h
index fc1f80ef43bf..6561176b03af 100644
--- a/Core/HW/MediaEngine.h
+++ b/Core/HW/MediaEngine.h
@@ -60,7 +60,7 @@ class MediaEngine
 	bool loadStream(const u8 *buffer, int readSize, int RingbufferSize);
 	bool reloadStream();
 	// open the mpeg context
-	bool openContext();
+	bool openContext(bool keepReadPos = false);
 	void closeContext();
 
 	// Returns number of packets actually added. I guess the buffer might be full.
@@ -81,7 +81,6 @@ class MediaEngine
 	                             int xpos, int ypos, int width, int height);
 	int getAudioSamples(u32 bufferPtr);
 
-	bool setVideoDim(int width = 0, int height = 0);
 	s64 getVideoTimeStamp();
 	s64 getAudioTimeStamp();
 	s64 getLastTimeStamp();
@@ -94,6 +93,8 @@ class MediaEngine
 	void DoState(PointerWrap &p);
 
 private:
+	bool SetupStreams();
+	bool setVideoDim(int width = 0, int height = 0);
 	void updateSwsFormat(int videoPixelMode);
 	int getNextAudioFrame(u8 **buf, int *headerCode1, int *headerCode2);