It isn't downconverted, the formats are all 1080i native and upconverted to 1080p, that is what I read anyway, even for Blu Ray. BD says it is 1080p native, but I think that is only for new movies that are mastered in 1080p, and most current titles are not. That means if you have a set that is only capable of 1080i/720p, it will work just fine. I agree, with BD so far for me, it is dependent on the transfer and the film itself. I have a few that are incredible and a few that don't look dramatically better than the SD DVD version. I can see a big difference between 720p/1080i and 480p.