There is speculation that Microsoft purposefully reduced video playback on the Xbox 360 for videos that were not purchased from Microsoft. And there's a pretty good reason to speculate that.
Don't Miss: Today's Electronics Bargains at Woot.com
Specifically, it appears that after the most recent Xbox 360 update, those Zune Marketplace videos are the only ones that users can play in full 1080p HD quality.
In other words, if you try to watch a TV show or movie that you didn't pay Microsoft for, the maximum playback output is 720p. However, somehow, if you're watching a TV show or movie that you bought from Microsoft, it's available in 1080p.
Of course, before the latest firmware update, all videos could be watched in full HD, so it seems like this is an intentional effort to force people to buy their video content from Microsoft.
But it looks like the company made a mistake when it tinkered with video playback, because the Xbox update also led to washed out colors and problematic black levels in some videos.
Microsoft confirmed in a Twitter post that there were some technical problems related to video playback, but remained mysteriously quiet about the specific 720p/1080p issue.
So if you didn't think Microsoft could make the Xbox 360 any more proprietary of a platform, it looks like the company just proved you wrong.