It says"Perform a system software update to renew the encryption key"?
You'll have to update the system software for your PS3 for it to play blu-ray movies.
You can read about it here:
http://manuals.playstation.net/document/en/ps3/2_60/video/aacs.html
On that page click on where it says "update the system software" and then on the next page it will explain the different ways you can upgrade the software.
Here's how to renew PS3 encryption key when you have internet connection.
You can check on this tutorial for more information:
Is It Possible to Renew PS3 Encryption Key without Internet
Just get your PS3 online and update its software, then the AACS encryption key will be renewed and you will be able to play Blu-ray on it. Or you can try converting your Blu-ray movie to MP4. Thanks to the built-in video player in PS3, you can directly play MP4 videos from a USB stick connected to the PS3. That way you won't have to get your PS3 online. You can check out how to convert Blu-ray to MP4 here: How to Rip and Convert Blu ray to MP4 with Blu ray to MP4 Converter
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