Unofficially it does - http://b-rad.cc/105/wdtv-firmware-dvd-enabled
I'd say so, especially if you already have some USB storage. Dead easy to use, no messing around with any configuration and plays practically anything you throw at it.
If your mkv has a DTS soundtrack though, it will not send it through the HDMI cable, it must go via the optical out and into a surround amp.
This device is Networkable. Apparently you can add a Wii Network adapter, which is USB to RJ45 and add a small bit of software and you then get a network port.
I'll try and find some links for this - looking into buying one of these devices to replace my media PC too and the networking was an issue to me.
Student loan in tomorrow and I'm seriously considering this. Is it worth the money?
usb too rj45 f*t*w.
Yes. £80 incl del you can't go wrong. I have at the moment access to 600+ movies at the flick of a switch with mine. It's great not having to look for discs.
What about file compatibility? MKV / Xvid?
Is there anything like this but for internal HDDs?