[Nexus 7 Q&A, Help & Troubleshooting] densetsu86:
Zippox your making a mistake. You are confusing scaling and compression. Compression determines files size, clarity (less pixels). Scaling which is done by your set top box, DVD/blu-ray player, computer, smart phone, tablet just makes it fit to screen or what ever size it needs to be. Will 1080p look better on nexus then a 720p that's a yes/no answer. It will depend on how much each file was compressed. Generally a 1080p file is compressed much less then a 720p. Why? Cause its resolution is too huge. Which means compression (blocks aka pixels, seeing weird shadow/dark areas move, blurry images) can be easily seen if its not done right. If you set a 1080p file and 720p file and compress them the same bit rate as the 1080 and view it on a 7" native 720p screen you will not notice a difference. Why one will be scaled down and the other will not be scaled at all. Clarity will be equal at that point. Now once that 720p file has to scale up then its defects will be shown regardless of actual screen size. And trust me you will never stream a 10gb file. You can download a 10gb file but you will never stream that. Those stream sites actually offer two completely different files. The streaming file is much more compressed. Why server load, then actual internet speeds. That would have too much strain on the server. This is why streaming is not an alternative to actually owning the file. And the digital download is not as good as its blu-ray medium.

But scaling and compression are not the same. And you were getting them confused. There is no point in a 1080p file for the nexus 7. Unless you have it 1" from your face and straining your eyes you will not see the difference if its encoded (compressed) properly. 1080p scaled down to 1280x720 will look just how its supposed to at 1920x1080 you just need to be closer to the screen. But then make that fit on 7" and 720p scaled down. That's just waisting space on the nexus7. a 30 minute anime file at 720p is generally 250-350mb. Its 1080p counterpart is usually 700mb. And it will look the same on your tablet. The only difference will be based on source material. TV capture vs blu-ray rip.

Then there is compressors. H264 8bit, h264 10 bit, divx, xvid, wmv, mpeg2. This will also define how the video looks. H264 10bit is the current best compressor. You can have a h264 10bit compressed lower (in megabytes) then h264 8bit and it will look just as good as its higher filer size h264 8bit. But naturally they will compress it less to completely blow h264 8bit out the water.

None of this has anything to do with scaling. Scaling down you see less but still looks very clean, and clear. Scaling up makes for a sloppy mess. And lesser you compress the less of a mess it will look but it will not ever look as good as native or less. And scaling of actual screen you should never see a difference as long as resolution of screen isn't touch.

There are two meanings for scaling and 1 for compression. Scaling resolution, scaling actual TV. Compression is only for file size which determines the actual quality. Overly compress it will look horrible. There is no under compress. Scale up from files resolution will degrade any image.