Scott Guthrie, GM of platform development at Microsoft, gave a talk targeted at developers here at the Mix 07 conference (which is, frankly, all targeted at developers). Here's the takeaway from his talk for Web users: HD-quality streaming video, as well as "DVD-like interactivity and overlays."
Guthrie quickly handed off his talk to Netflix for a demo we've been waiting for, by Neil Hunt of Netflix and Darin Brown of Avenue A/Razorfish. Check out the video: