HDMI, HDTV and PCs
When you connect a PC to a TV using an HDMI connection, the edges of the displayed image are just off the screen. This is because the HDTV image standard being applied uses a technique called overscan.
Overscanning has been applied to all TV signals for at least four decades. It's a technique used to compensate for early TVs' inability to display a clear picture all the way to the edge of the display. The picture broadcast is actually about 5-15% bigger on all sides, which ensures that the entire display real estate is taken up and there are no visible black borders. If you were able to zoom the image back, you'd actually see a fair bit more of the image than you normally receive.
LCD and other fixed-pixel screens have essentially eliminated the need for signal overscanning, but not everyone has the luxury of a fixed-pixel TV in their living room. So television standards are still targeted at the lowest common denominator, and overscanning will be with us for a while yet.
PC video standards like VGA and DVI have the ability to detect the native pixel resolution of the monitor they're connecting to, and generally have no problems matching the exact pixel resolution. HDTV standards don't work the same way - they're not trying to match the screens supported pixel depth, they're just displaying the image as defined by the particular standard (composite, HDMI), assuming that no adjustment is necessary. So a computer attached to a TV by HDMI displays a full HDTV image with overscanning applied and the edges off the screen.
Plus there's the consideration of resolutions. HDMI's effective resolution at 1080p is 1920x1080 pixels, but there are only a few LCD or plasma TVs which offer this as the native resolution. My TV, a Sony Bravia V40A10, has a native pixel resolution of 1366x768 or 768p. However, unlike LCD PC monitors which tend to display an "out of sync" error message on a black screen when the intended resolution is too high, LCD/plasma TVs are quite capable of displaying images at resolutions above their native resolution. However, the image is not that great - it's certainly nowhere near as sharp as the native resolution - edges are not clearly defined and the image looks rather squashed and fuzzy.
So when deciding to connect a computer to your TV, there's a trade-off between using it as a computer on a really big screen, or as a high-definition media input. If you want to use it as a computer, then the best visual results are with the VGA/DVI outputs. If you'll only be displaying digital media such as movies, then using the high-def component or HDMI outputs is the way to go.
If you want the best of both worlds though, then some correction is necessary. The computer will only display what it's told to display, and the TV assumes that there's nothing wrong with the incoming signal, so this is where vendor drivers from nVidia and AMD come into play.
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