The FreeAgent Theater also plays back DivX files and had no trouble with any of the AVI files we threw at it. We played a number of video file formats on both a small 17-inch TV and a larger 50-inch TV. If you're dealing with a small TV, the picture looks pretty good whether you're connected via the standard composite (yellow) cable or component, though component will always look better. When you start to step up to bigger TVs and try to blow the picture up, you're limited by the quality of your file. The less compressed, high-resolution files will obviously look better.
As noted, we loaded a variety of files--video, JPEG still images, and MP3 music--onto the 250GB FreeAgent drive that came with our review sample and a separate 4GB thumbdrive that we provided. Except for one video file that remained hidden, the system had no problem revealing what we had on the external drive and the thumbdrive.
One small issue: Like the Western Digital (and other media players of this ilk), you do have to point the small remote directly at the IR port on the unit to get the unit to respond. In other words, it's not superstrong IR, and you have to pay attention to where you're pointing.
A more significant problem: The Seagate simply doesn't decode as many file formats as the Western Digital does.
Here's the list of supported file formats:
MPEG-1, MPEG-2 (AVI/VOB/ISO/MKV), MPEG-4 (AVI/DivX/Xvid)
JPEG files up to 20 megapixels
MP3, WMA, OGG, AC3 (Dolby Digital), WAV, WMA, M3U
As part of our tests for these products, we throw a few hard-to-read file formats at these players, and of the four files we loaded, the Seagate wasn't able to recognize any of them. Most notably, there's no support for H.264 and AVC, which have become increasingly popular. Nor does it support AAC audio, which is what you'll get from any iTunes purchase. And note that the "container" doesn't always imply support for the underlying format--for instance, one MKV file we had didn't play, because the underlying file used H.264 encoding. True, you can use a converter to make most video formats compatible with the FreeAgent Theater, but we're comparing native support to native support.
In the final analysis, before you purchase any of these types of media players, you'll have to ask yourself what you plan on using it for. This Seagate has some nice things going for it, including an attractive design and generally good performance (particularly when it comes to photo viewing). However, the Western Digital is more versatile in terms of file formats supported. And in our book, that trumps the Seagate's pluses.
Of course, if you already have a FreeAgent Go drive and are fine with the supported file formats in the list above, the bare-bones version of the FreeAgent Theater HD is definitely worth considering.