Netflix’s Watch Instantly service has become more like Watch Everywhere over the past year, as more devices have added its support.

While very convenient and offering pretty good quality, the service is still lacking some features that home theater buffs want ... and still need to play optical disc formats to get. Namely, surround-sound audio and full HD 1080p video.

The former appears to be on its way to the rental giant’s streaming service this year, according to a CNET report. The latter, however, it seems is not in the works for a 2010 rollout, after initially believed to be, so looks like Netflix’s Blu-ray rentals will still come in handy (despite the surcharge).

It also means that Vudu still has a leg up on Netflix in that realm of high-def viewing, with more choices available in HD and higher-quality with its nice HDX offerings. Plus Vudu recently added tons of apps and more display manufacturer partners to stream its own service.

However, CNET notes that Netflix uses Microsoft’s Silverlight platform, which has 1080p capability, for streaming so perhaps it will be in the mix soon enough.

Of course the other drawback to Netflix’s streaming is that there’s “only” 17,000 or so selections to choose from, as opposed to 100,000-plus in the disc selection. And the majority of those are not in HD.

So we’ll be happy for the 5.1-channel surround sound whenever it comes (no timetable was mentioned), but we’ll keep our fingers crossed for more choices and more resolution.

Arlen Schweiger - Editor of Electronic House Magazine

Arlen writes about home technology installations and product news and reviews for electronichouse.com and Electronic House magazine.