Apple TV

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iTunes only
To be clear, none of the video quality problems are necessarily the fault of the Apple TV. It's the movies and TV shows that you're buying at the iTunes Store that are falling down. Even with the higher resolution (they were formerly optimized for 320 x 240), iTunes videos are still optimized for the small screen and the storage capacity of the iPod. And they look fine on that 3.5-inch screen, or even a 15-inch laptop screen. But these same videos just can't scale up to a 50-inch plasma without suffering. Ideally, Apple will someday begin selling files that are optimized for true DVD resolution (720 x 480) or even true HD resolution (1,280 x 720), and do so with considerably less compression.

In the meantime, though, there's not much of an alternative. That's because the Apple TV is strictly a one-trick pony, and its trick is iTunes. Apple TV's huge advantage in the market, compared to the competition, is it's the only noncomputer networking product that's capable of streaming content purchased from the iTunes Store--the number one digital media retailer in the world. But, unlike the majority of competing products, it can't stream anything else. If it's not in iTunes, the Apple TV can't see it. So it's up to you to get your media files into iTunes--an easy task for music (CDs and MP3s), podcasts, and photos, but a much bigger challenge for videos.

Anything already encoded in the MPEG-4 or H.264 formats is generally good to go. But that leaves a lot of AVI, WMV, DivX, and Xvid files on many people's hard drives with nowhere to go. Apple's own Quicktime Pro (US$30) offers an Apple TV-friendly conversion preset and plenty of third-party software is already or will soon be available, but to use it to get those other formats into iTunes requires a lot of transcoding. (Even worse: A lot of people have already done this to optimize their digital videos for iPod viewing. Those files will work on Apple TV, but the resolution will be so low that it'll look horrible on your TV.)

For the record, the Apple TV is capable of handling files encoded at a maximum resolution of 1,280 x 720 at 24 frames per second, and 960 x 540 at 30 frames per second, all of which is scaled to the output resolution you select (480p, 720p, or 1080i).