Don’t expect video quality from Netflix streaming video to be the same as DVDs or Blu-Ray discs, especially if you have a full HD (1080p) HDTV and are used to watch movies on Blu-Ray. If you pay close attention Netflix movies look pixelated and blurred. If you are a videophile you will cry, so don’t even try.
Netflix offers some movies on what they call “HD”, but “high definition” is a broad term and can mean only that the quality is better than the non-HD movies, not meaning that it will play at Blu-Disc-like quality.
We watched around 10 movies and all non-HD movies had a quality inferior than DVD movies. HD movies looked better than DVD movies, but below Blu-Ray quality. Of course all this notion of quality is taken from the point of view of experts. If you play them on a lower resolution TV or if you are not paranoid about quality as we are, movies will play just fine.
We took some pictures to show you some comparisons. Please note that we took a picture of a given part of the screen only, where you can compare quality; we didn't edit the pictures. For taking a picture of the whole screen we would need to resize the image to fit here and this editing would bias the quality.
On our first example we have a scene from “Risky Business”, a movie that uses Netflix standard quality.

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Figure 1: Risky Business on Netflix on PS3.

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Figure 2: Risky Business on DVD.

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Figure 3: Risky Business on Blu-Ray.
Below we have a scene from “Romeo Must Die”, which is offered in “HD” on Netflix.

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Figure 4: Romeo Must Die on Netflix on PS3.

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Figure 5: Romeo Must Die on DVD.