Donald Bell reporting for CNET:

Come Spring, the Zune HD should receive a firmware update providing support for MPEG-4 part 2 Advanced Simple Profile videos, including the torrent junkie’s format of choice, XviD. When pressed on whether DivX support would also be added, our contact explained it was unlikely, because of proprietary restrictions. Also unclear is what range of resolutions will be supported, although we did confirm that the new format support will maintain compatibility with the HD AV dock accessory.