9to5 Mac:

When the Apple TV undergoes an update later this year, most likely in September, we’ll most likely see it pack Apple’s new A5 chip, which will handle 1080p video with ease.

As it is, the current Apple-TV is already able to decode H.264 1080p video by hardware, but the HDMI output is downscaled to 720p. However, non-H.264 HD video playback is laggy and practically unwatchable, even if it is only 720p.

If the A5 is indeed able to handle all kinds of HD video with ease (and the iPad 2 specs certainly seem to imply this), we may soon see the end of this limitation.

The little back box is already impressive, and it would only get better with 1080p support. When that happens, maybe it will stop being “just a hobby”.