Seems pretty simple, but I have yet to have a solid grasp on all of the different formats of video/audio, so I'm hoping I can state my objective here and get pointed in the right direction.

What's the best way to copy my DVD/Blu-ray collection to an external drive, and be able to watch movies directly from the drive? I'd like to know which software is best for this, and which formats I should be using. This is probably obvious, but the goal is to use the least space possible while keeping the quality the same.

Thanks for the help!