The Netflix advertise a Full HD 1080p quality. The picture quality of Netflix HD streaming is nowhere near as good as Blu-Ray - in fact it's a little bit better than DVD. The reason is that the bitrate of Blu-Ray is roughly 10x that of Netflix HD and that Blu-Ray is full 1080 HD. Whereas Netflix HD is only compressed 1080p. It's easy to spot this difference; pause a HD stream and look at all the patchy colors and pixelation. Now do the same with a Blu-Ray disc...
The current infrastructure of Internet simply could not cope with the amount of data needed to stream real Full HD at Blu-Ray standard and Netflix themselves have admitted that they format need only 5 Mbps Internet connection. So let's say the quality is highly compressed, because real Full HD would need at least 10 Mbps or more.
The "HD" in Netflix just means the video is either 720 or 1080 resolution and compressed highly... that's all. It doesn't matter that it is 720 or 1080 poor quality data. I think the term "HD" should be used more strictly.
Now, don't get me wrong, I absolutely love Netflix HD streaming - I use it all the time with Spotify. For most things the quality is perfectly acceptable for me and my 22" pc screen. Very nice, actually. However, if you want the best possible picture quality then you have to use Blu-Ray. This becomes more important the bigger your screen is, for example on a 40" plus screen I would imagine the difference is very noticeable.
Folks, what you think about Netflix HD?