TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

Yesterday, Microsoft released its biggest update to the Xbox 360 yet — a brand new operating system. The new OS, what Microsoft is calling the “new Xbox Experience,” is quite nice. It is much slicker than the old blade OS. It uses a vertical list for the main categories (Video Marketplace, My Xbox, et cetera), and a horizontal list for drilling down.

That’s not what I was interested in, though. This update brings Netflix Instant Watch integration, which I have been using the past few weeks to watch Heroes on my Mac.

Its Netflix integration is very good. After activating my Xbox on the Netflix website, my Instant Watch queue showed up. Rather than list the queue as text, it shows box art — which looks great.

After selecting Heroes, it lists the available episodes. What is nice is that it indicates which episodes you’ve watched, and how much of them — so if you’ve only watched half of one episode, it will say “50% complete,” which is great because I sometimes don’t remember what episode I last watched.

Once you’ve selected the episode, it determines what video quality your Internet connection can handle. I am on a relatively slow school network, and the quality was excellent — much, much better than watching it through Safari on my Mac. It is un-pixelated, the colors are good, and it doesn’t stutter at all. When network speeds slow down, though, rather than just try to continue playing like video does in a browser, it stops and waits until it buffers again. If the connection slows enough to make the current video quality level inoperable, it asks you if you want to lower the video quality. There is no need to manually pause the video and wait for it to download enough — it just does it for you, which I really like.

I am happy to say that Microsoft has done a great job integrating Netflix with the Xbox 360. I wish, though, that you could browse the Netflix library from the Xbox 360 itself. That is a limitation Netflix has put in place for all streaming devices, but it would be a step up above using the Instant Watch queue.