According to a Digital Factory investigation, the new dashboard update that was supposed to turn the Xbox 360 into a savvy media-friendly device suffers from one serious problem: reduced video playback quality. What's more, Microsoft reportedly knew about it and covered it up, says this C&VG report. Apparently the update forces video content to run at "limited range RGB levels," which results in washed out colors. Black looks gray post-update, according to C&VG.
Those who beta tested the update prior to its launch flagged the issue so that Microsoft was aware of it, but according to that Digital Factory investigation, Microsoft ignored the issue, deleted all threads referring to the problem, and sent testers the following generic message:
"Thanks for the feedback! Though we will not be able to incorporate your feedback into this release we will save it for consideration in future releases. Thanks for using the new Xbox Update and please keep up the feedback!"
Microsoft has not publicly commented on this story, but we'll let you know if they do.