Every time this comes up someone comes in and says the person has an internet problem or network problem.. no, Netflix on the ATV2 is currently flawed. Bottom... line.... Look through all the threads and posts here and you will find every person that has a PS3 (myself included) can stream Netflix perfectly while the ATV2 sputters or drops audio, etc. My personal feeling is that it's possible Netflix has different servers for ATV2 users and weren't anticipating the better-then-expect sales of these units. But really, who knows.
P.S. if you have a PS3 you should be using it for Netflix anyway, as it has exclusive higher quality HD (1080p) and surround on some movies.
I'm sick of people saying "Just use your PS3" like everybody owns one. I happen to own a PS3, and yes it is my primary NetFlix box, but in my living room.
Before I go any further let me describe my network setup. My wireless router sits right next to my TV in the living room. It's a Westell 327W that AT&T issued 3 years ago for their DSL service and I pay for the maximum 6 mbps DSL. My neighboorhood is new construction and we don't have cable yet so I'm limited to DSL. The PS3 and Xbox360 are connected with CAT5 directly to the router. My first ATV2 is sitting right next to it but connected wirelessly.
I purchased an ATV2 (actually two of them, one for the living room and one for the bedroom) specifically to bring NetFlix to another room in the house cheaply without having to move any of my game consoles from the room with the biggest tv and best audio setup. I bought the second one for the living room for the the airplay features and streaming from iTunes, not neccesarily for NetFlix.
I have a treadmill in my bedroom and a mounted 20 inch LCD at eye level right in front to create a good workout space. I absolutely hate working out but I figured being able to watch NetFlix or stream content from my iMac would make it bearable.
The problem is that I'm having the same hitching, pausing, stuttering, and sometimes just downright not playing when trying to watch NetFlix. Everything else seems to work OK, although sometimes I also have issues with HomeSharing speeds, but only on the one in the bedroom.
This has been very frustrating and I would say it's just network speed issues but I also have the same issues with the one in the living room but NONE with the PS3, 360, or Wii (in my daughter's bedrrom and wirelessly connected) which all run NetFlix flawlessly. I wish Apple and/or NetFlix would just admit that there is a problem and issue a fix or a statement/reccomendation on what to do about it.
I love Apple, but I'm getting pretty sick of the excuses and lack of awareness of some big issues, i.e. "Just don't hold it that way". etc.
I think what it really comes down to is that either through some kind of hardware limitation or limitation of the H.264 video encoding or the way NetFlix implements it's use for ATV2 users (or ALL of the above); there is a major flaw/problem that has yet to be recognized and addressed. A problem that can only be overcome with ridiculously fast network speeds that 95% of America (or the world) have yet to have access to. Either because it isn't available or it's too expensive.
I still think part of my issue is that the ATV2 that I'm having issues with is in the back of the house and the signal has to pass through 4 walls to reach it. It shows that I'm getting "four bars" of signal but I don't think that means anything when it comes to throughput and consistency in signal strength. The reason I think this is the issue is because I've also had the same issue with my iPhone and YouTube buffering when I try to use it in that room. I've purchased a wireless signal booster on Amazon.com (made by Hawking) that is supposed to not only increase the range of a wireless network but also increase the wireless throughput to your devices. I should get it any day now and I'll let you guys know if it makes a difference.
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TV2.