Yes it is only SD, but it is better than the SD that the Cable/Satellite companies charge/rape you for (highly compressed). I would call it DVD quality, if not, it is extremely close to it. I can deal with that vs HD for the low price of a Netflix subscription over the high price of Cable/Sat (and still get Blu-rays). I no longer have satellite or cable. I am a fan. I've been screwing around with Boxee on my netbook, and it is really cool. Once I get The Boxee Box from D-Link, I will have completely replaced Cable/Satellite.