AVI
Audio Video Interleaved, or AVI, is one of the may video formats supported by the Xbox 360. File extensions for AVI include .avi and .divx. AVIs use a 5 megabit per second bitrate with a maximum resolution of 1280 x 720 at 30 frames per second. Audio can be either MP3, 2 Channel Dolby Digital or 5.1 Dolby Digital.
H.264
Also supported by the Xbox 360 is the H.264 standard. This standard includes file extensions .mp4, .m4v, mp4v and .mov. Video is handled via a 10 megabit per second bitrate with a maximum resolution of 1920 x 1080 at 30 frames per second. Audio for H.264 video is two-channel AAC.
MPEG-4
The MPEG-4 standard, similar to the H.264 standard, is also supported. Like H.264, file extensions include .mp4, .m4v, mp4v and .mov. Unlike the 1080p capabilities of H.264, MP4s have a 5 megabit per second bitrate and a maximum resolution of 1280 x 720 at 30 frames per second. Audio is also played through the two channel AAC standard.
WMV
Finally, the Xbox 360 also supports Windows Media Video, or WMV. The file extension for WMV's is .wmv. The Xbox can recognize WMV7, WMV8, WMV9 and VC-1 WMV profiles. WMV video has a 15 megabit per second bitrate and a maximum resolution of 1920 x 1080 at 30 frames per second. Audio profiles include WMA7, WMA8, stereo and 5.1 WMV9 Pro and WMV Lossless.
Xbox Live
In addition to all of the external video formats that are supported, the Xbox can also play videos downloaded from Xbox Live. Xbox Live has an entire library of standard definition and high definition content from game trailers to television shows to movies. Videos can be downloaded to own or downloaded to rent for a limited amount of time.
Netflix
If you are a Netflix subscriber, you can also view Netflix videos on your Xbox 360. With the Netflix application available on Xbox Live, you can view an unlimited amount of movies through Netflix's Instant Watch feature. You can browse movies, manage your queue and watch content all on your Xbox. You must be a Gold Xbox Live member in order to use the Netflix application.