Jimpal, 2 things.
Firstly, simply because your ATV works for you doesn't mean it works for everybody. I note that you say you have a Time Capsule, which means that you have an all Apple setup and maybe your Apples play together nicely, while the ATV doesn't play nicely with other brand routers. Also, maybe the Netflix servers you talk to don't have the problem that other Netflix servers might have. Depending on your geographic location, you might just get good servers. Thus, to announce that your ATVs work great; ergo they work, is a false argument.
Secondly, I can state quite definitively that my ATV2 worked for a good while with Netflix when I bought it and then it suddenly stopped working and suffered interminable buffering problems for a very long period for no apparent reason. It was so bad that I basically had to set it aside for the most part and rely on my Roku. Network speed was not an issue; my line was plenty quick, and I had no issues watching with my Roku, or on my computer. At some point quite recently, these problems, at least for me, seem to have resolved themselves.
PERSONALLY, I think there was about 18 mo ago a serious problem ATVs were having with Netflix. If you scroll back in this thread, you will see the problem was quite widespread back in that timeframe. I suspect at its root it had something to do with how ATVs work differently, not buffering video, but presenting it in real-time and varying picture quality based on bit rate. Whether the problem was with the ATV or with bad implementation at Netflix, I don't know; although either way I SUSPECT Apple was turning a blind eye to it because they were happy with ATV owners having bad experiences with Netflix so they would purchase their media from iTunes. Note in this regard that Netflix would have no incentive to ignore the problem. Furthermore, whether the problem was with Apple or Netflix implementation, I blame Apple either way because it was their unit that worked differently from everybody else and they who allowed their users to suffer through the buffering nonsense for a very long time without working aggressively to fix it. As the "cadillac" of computer equipment, it is simply not acceptable for their streaming device not to work flawlessly for all users with customary setups with the premier video streaming service, which however much they don't like it, is Netflix and not them. If Netflix was screwing up the implementation, it was Apples DUTY to march an army of software engineers to Netflix' headquarters and fix Netflix's system for them if Netflix couldn't. Again, I think this was willful neglect as they wanted to drive people to iTunes. Anyway, at some point in the last 6-8 mo, this problem appears to have been resolved; at least for me. Again, I don't know if it was because Apple finally realized that their reputation was suffering, or if Netflix finally dug in and worked it out. I will note that I replaced my main router with an Airport Extreme recently, and so it may be that has helped; though I am pretty sure my ATV2 was working again with Netflix prior to installing the Apple router. I do suspect Apple was involved in the eventual solution. As we all know, Apple does not publicly admit when their products have problems and prefer to fix things silently in the background. That's part of the reason the Apple maps fiasco was such a big deal...Apple actually publicly fell on its sword. Usually it pretends everything's great and their customers love them so much they pretend their products have no problems.
