Washed Out Brightness

I have exactly the same problem. My tv is an LG 42 inch model. ATV2 colors are very washed out compared to the very same scene streamed to the same tv (with the same setting: standard) from my LG BD390 blu-ray player. If anyone wants to see proof of this, I just took photos from the same scene from a movie on Netflix streamed by the ATV2 and by the BD390. On the latter, the colors are brilliant, saturated, vibrant, strong. On the ATV2 they're badly washed out, pale. The difference is astounding. (I'd be happy to email the two photos to anyone who's interested.) I too tried a brand new HDMI cable (Amazon brand, newest version) and that made no difference at all. And there's nothing at all on the ATV2 to adjust! I called Apple and they had no idea. The first technician first said it was due to the fact that the BD390 is putting out 1080. When I doubted this, the connection was dropped ⚠. I called back and the second Apple person agreed that the 1080/720 issue had nothing to do with the problem, and suggested it might be an HDMI cable problem. But as I said, that turned out not to be the case. Could it be an incompatibility issue with LG tv?

just try to adjust your settings on your TV, brightness & contrast settings. Modern tv's have individual settings per video input. Tweak those settings and sharpness. I generally lower my sharpness setting to about 25% of max. I know on my tv it was very washed out looking pic as well and I just tweaked those until it looked normal.

Just to close the loop on this -- I adjusted the tv display's settings and now the ATV2 matches the results from the BD390 blu-ray player !!!! Hooray I did not try this before because I thought, mistakenly, that the tv display settings were the same (once set) across all inputs, be they cable, blu-ray player, or ATV2. Not so! To my surprise, the LG tv set associates a display setting with a particular input -- so now whenever I have the input on, for example, HDMI3 (my ATV2), it uses the screen settings that I assigned it to increase color saturation, etc., to match the BD390. But when I switch inputs to HDMI1 (cable) or HDMI2 (blu-ray player) the tv automatically brings up the display settings previously assigned to those inputs. The tv is smarter than I realized. So thanks for the suggestion, that has solved my problem.

I agree, adjust your TV settings until it looks good

Glad you worked it out