NewTeeVee has a report on the new hardware device built by Roku that mates to Nextflix streaming online service. At just $99 it's not expensive but it looks to be only SD. There is an HDMI output so perhaps it…
Just poking around this afternoon I found this which says that Amazon is definitely working on an HD version of their Unbox movie download service. This service is operated in partnership with Tivo. The user interface is very nicely integrated into the Tivo menus. My wife likes it a lot.
They suspect that the new service will be based upon H.264 compression. That’s about the only real option around.
Neither the company nor its customers will have unlimited bandwidth so older compression schemes would be impractical. Newer compression schemes would require that Amazon encode the content themselves. Better that they settle on H.264 which is what Apple’s iTunes uses amongst others.