Watch Instantly fans could be due for a big upgrade, as CNET has heard the company will roll out 1080p and 5.1 surround sound later this year. No word on timing or any other details, but this could mean its moving to version 3 of Microsoft's Silverlight streaming platform with its additional tweaks for adaptive streaming and hardware graphics acceleration. Also unknown is how much bandwidth would be necessary, but considering Microsoft already uses very similar technology for its 1080p Instant On videos on Zune Marketplace through the Xbox 360 while only requiring 3 Mbps and VUDU HDX 1080p videos only state a minimum of 4500 Kbps, a massive jump in available bandwidth might not be necessary if you already get clear 720p video. The last big hurdle? How much content will be available that way, Gizmodo points out only about 6 percent of current offerings stream in HD we'll be watching carefully if the pace picks up going forward.
Update: Netflix pinged CNET to let them know that 1080p was mistakenly included on a roadmap of 2010 features, however if you can get over missing all those extra pixels, surround sound and closed captioning are definitely booked for an appearance later this year.