I realize this is a reply to a very old post, but, I just had the same thing happen to me. I downloaded "The Break-Up [Video On Demand]" from Amazon and it was totally unwatchable. I had all sorts of pixelation, kind of like a bad satellite broadcast. Or a bad digital cable signal.
And, as if the picture wasn't bad enough, the audio was horrendous. It would cut out every 30 seconds or so.
Amazon was fine about it, though. They credited me with no questions asked. But, this is the first time I've ever had a bad download from Amazon to my Series 3. (If that is what it was?)