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XStreamHD beams 1080p HD video and DTS-HD Master Audio into your living room

XStreamHD uses a satellite dish to pull in movies featuring 1080p HD video and DTS-HD Master Audio--plus the system is packed with tons of other enthusiast-friendly features.

The XStreamHD media server is about the size of a Nintendo Wii and features a quiet, fanless design. CNET Networks

Anytime the format war between HD DVD and Blu-ray is discussed on the Internet, there's always a commenter that chimes in to say that digital downloads are going to beat them both. While we've seen some successful products using the digital distribution model, such as Vudu, we've always been skeptical about true high-def digital distribution taking off in the near future, mostly because high-bandwidth Internet access just isn't cheap enough.

The XStreamHD satellite dish is comparable in size to other satellite providers, like DirecTV and Dish Network. CNET Networks

Instead of waiting for cheap, super-fast internet connections, XStreamHD is looking to an older technology to provide the extra bandwidth--a satellite dish. The XStreamHD system consists of essentially three components: a small satellite dish to receive content, a media receiver that can store content on an internal hard drive, and a media receiver that sits in your home theater to output the high-def movies. And while the phrase "HD" is thrown around haphazardly a lot these days, XStreamHD is promising full 1080p studio-master quality video--essentially the same video files you'd get on the equivalent Blu-ray or HD DVD disc--along with high-resolution soundtracks, such as DTS-HD Master Audio.

Differing from traditional video on-demand services, XStreamHD is designed to have movies downloaded before you even pick up the remote. Users will be able to select their favorite existing titles or genres, and the XStreamHD will then preload content based on your preferences. Similar to TiVo, the XStreamHD is also able to anticipate the kinds of movies you like, so that your media server is never empty. Obviously, we'll have to see how well XStreamHD's prediction skills work in real-life as we've seen varying performance on existing services--in our experience, TiVos tend to miss as often as they hit, while Netflix is almost dead-on accurate. We could see users running into some issues if, for instance, a relative is visiting that likes different movies than you do.

The movies are stored on the media server, then are distributed to the media receivers via gigabit Ethernet. As many as four simultaneous HD streams are supported, and any DLNA-compliant network receiver is supported. That means popular third-party network-connected devices such as the Sony PS3 can be used as additional media receivers in the XStreamHD system.

The media server features three ATSC tuners and two hard drive slots, plus an eSATA port for even more storage. CNET Networks

Clearly, XStreamHD's pride and joy is the digital distribution of movies, but the hardware itself is no slouch. The media server also features three ATSC tuners so you can record free over-the-air HDTV. Adding to its DVR feature set is what XStreamHD calls "Adaptive Recording," which enables the DVR, for example, to properly record an entire football game even though it runs over its scheduled time. TiVo has similar feature, which allows you to add a preset amount of time to programs such as sporting events, but XStreamHD claims its technology is more accurate and eliminates the guesswork on the users' part. The XStreamHD media receiver is also capable of playing lossless FLAC audio files, which is a huge plus for the enthusiast audiophile community, especially considering the media receiver utilizes a quiet, fanless design. And if all that isn't enough, it's capable of handling VoIP phone calls.

The major chink in XStreamHD's armor is that there are currently no announced content partners. No matter how beefed up XStreamHD's hardware is, the service will go absolutely nowhere without getting major movie studios on board. We have to imagine XStreamHD will announce some studio deals as it gets closer to launch (otherwise it's not a very useful product), but there are no guarantees--and only time will tell.

Of course, the XStreamHD system will have to compete with the wide variety of on-demand and pay-per-view options already available to cable and satellite subscribers. Sure, cable and satellite can't currently deliver the same kind of pristine video and audio quality that XStreamHD is promising, but it's going to be hard to convince the average buyers to install a whole new system just for better quality movies. On the other hand, this is the kind of system that will absolutely appeal to home theater aficionados, and we have to admit we were a bit starstruck by the spec sheet when we first laid our eyes on it. Unfortunately, the XStreamHD system isn't slated to come out until the fourth quarter of 2008, but we love the relatively low start-up cost--$400 for a complete home setup, including a media server and media receiver. Hopefully there's not an additional subscription fee (beyond the per-movie cost) to go along with that, but we'll be sure to get more details as the release date draws nearer.