Microsoft seems to be pushing ahead with the Zune HD software updates to. In an upcoming spring firmware release, the player will support video encoded in XviD and playlists into streaming.

If you have a hard drive full of XviD files (that you may or may not be obtained via BitTorrent) this is good news because you won’t have to convert them whenever you want to view them on the Zune HD. Support for the similar, but proprietary, DivX codec is unlikely.

The playlists of streaming will be an extension of the Smart DJ offering already in the Zune desktop software. This will allow the device to offer playlist suggestions much like the new Genius feature of iTunes. Smart DJ will pack additional surprise, however. When the player is in range of Wi-Fi, Smart DJ can stream songs right from the Zune Marketplace without the need for local storage. Is the HD Zune device more attractive, in your opinion?