Uclagamer_99
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Digital Foundry posted an article about a month ago about the black level issues with the fall dashboard update. They have posted a second article on this and the results are quite interesting to say the least:
http://www.eurogamer.net/articles/digitalfoundry-what-went-wrong-with-the-360-dash
http://www.eurogamer.net/articles/digitalfoundry-what-went-wrong-with-the-360-dash
So, what's going on? The obvious conclusion is that the SDK Microsoft is believed to have supplied to third-party video partners is limited to 720p only, leaving Microsoft's host service with a clear quality advantage. The message we draw from this is that the platform holder wants to expand the take-up of the Xbox 360 as a media-streaming device, but very much on its own terms with its own content getting the best quality, and the user's "homebrew" media not being given much importance at all.
Incorrect video levels are obviously a bug, but blatantly downgrading resolution looks very much like part of a strategy. As it is, the new dashboard's preview programme ensured that the issues were brought to Microsoft's attention. Now we wait to see whether anything will actually be fixed.