Picture size small during movie playback

Hi,

I just installed an apple TV. Latest software downloaded. When I am browsing the menu the full tv screen is being used. I have HDMI connection to TV. When I access a movie from from a library on my Mac the playback is in a small centered letterbox in the middle of the screen the playback does not fill the screen even though the aspect ratio is right for fullscreen play back.

Thanks for any help.