So many errors in story and comments! Does DivX, XviD, mkv, ISO, VOB...
I'm so shocked at the poor information in this article, and the outburst of misguided comments ("no divx!?"), that I decided to register to post a comment.
I have one of these, and I know it *DOES* mpeg4 (xvid, divx, ...) in AVI container as I've tested it. Also does .srt subtitles in separate file (same basename in same folder). I also tested a ripped DVD in .iso, which plays the main video (but doesn't show the menu). From the forums that I followed on this player, others play MKV (720p, 1080p ...), MP4, OGG, FLAC, AC3, etc
Admittedly, this toy has issues - some of which (*) WD promised will be addressed by firmware updates. Others are simply out of scope (no Wifi, no DRM formats like Apple's). And sure, you can buy another device (Popcorn) at double+ the price.
But before shooting it down, people should really look at price AND features.
You want a full featured media player... sure, take your pick... but pay the higher price.
You're looking for a nicely priced media player that DOESN'T break the bank and plays a wide range of formats without getting too networky-complicated, and plays the new formats like MKV and does hi-def (through HDMI without HDCP encryption)? Then look closely at the WDTV.
For me, it hit the right balance.
(*) some of the current flaws: no support for more exotic charsets in subtitles (greek, polish, ...); some missing power features (doesn't power down the attached bus-powered HDD, when it's off); can't flip through DVD chapters or play DVD menu (but can do DVD subtitles);