AT&T is bringing another option for video watching on Windows Phone 7 beyond Zune videos: U-verse for watching television. It will be free to current U-verse customers, but non-customers can still get in on the action for $9.99 a month. It will be available sometime next month, too!
In the demo today, Microsoft showed searching for shows and viewing them and it all looked quite good and consistent with the Windows Phone 7 Metro UI.
Oh yeah, and it's coming to Xbox too - though you definitely need to be a U-verse customer to take advantage of that option.