For home theatre stuff, almost anything will handle it just fine. The fastest internet connection any home user has can be easily outrun by even the most humble of atom chips.
Something like this
toss in a stick of ram, a power supply, case, and HDD of your choice. You could have one of these running win 7 with the rest of the hardware/OS for around $400.
we have built a couple media center type units now for folks using these cases
They are some sexy looking little boxes that would easily blend in nicely with other entertainment center hardware.
Looks like a computer (as opposed to a TV, phone, or tablet) to internet content.
HDMI and S/PDIF out and able to plug a keyboard in.
That eliminates Apple TV and Roku, but it does seem there’s a lot of “less than full-sized, full priced computer” stuff out there.
On most modern computers, I don’t believe it is. I think even newer integrated chips have hardware h.264 decoders.
Still, pretty anything with a dual core* can handle CPU-based decoding at 1080p, so I guess that means you can use even older integrated GPUs.
*My single core Atom netbook definitely could not handle full HD. It could handle 720p in outside programs and 480p in flash-based stuff, although both would drop frames. 1080p was a slideshow.)