The internet has made it possible to watch HD movies online by (1) the availability of broadband internet service, (2) streaming codecs, and (3) delivery of HD viewers.
The availability of high definition movies over the internet would not be possible without enough bandwidth. Sure, the movies need to be digitally encoded and made available on a server, but that would be useless if consumers did not have enough bandwidth to view these data streams.
Because of the large volume of data associated with high definition streaming, the delivery of HD media would not be possible over the internet without compression technology. Without the appropriate technology, the internet would be hopelessly bogged down by trying to distribute such massive blocks of data.
Finally, the internet has made watching high definition movies by making available viewers capable of rendering high definition content. As the compressed data arrive at the client computer, it decodes the data stream via a software device called a codec which interfaces with a HD compatible viewer. While it is possible for Windows Media Player to play movies in high definition, many of the movie distribution sources e.g. Netflix) use their own proprietary players in order to safeguard intellectual property rights.