A couple of points:

Most DVRs have online capabilities. I would suspect that their sales are increasing because they are evolving into hybrid devices that utilize both the old and new mediums. Just because someone isn’t watching a movie on their laptop, doesn’t mean they aren’t watching content from the ‘net, and not traditional broadcast. On my DVR, I have to be connected to the Internet if I want Pay-Per-View. My point is that the TV is basically a monitor these days and whatever device that pushes content to it, will eventually get the majority of it’s content from the internet.

Right now the early adopters appear to make up a small niche, but this has always been the case with technology – think cell phones, computers, etc… These started off as devices for a select few and were very expensive at first. Thanks to Moore’s Law of Accelerating Returns, it will only be a matter of time before all of the participating technologies converge (bandwidth increases, device affordabilty, better compression techniques, etc.).

Finally, I believe advertising will be the final killer of television, because the existing rating systems are not as quantifiable as the internet. Internet statics provide exact numbers – we can even track how long someone’s mouse hovers over an ad, even if they don’t click through. As the economy shrinks, advertising agencies will be more accountable to their clients. 3MM viewers on television will cancel almost any show – 3MM viewers on the internet is a raging success. Not to mention the potential to upsell consumers… Say you’re watching a sitcom and you like the song on the end credits? The internet allows you to immediate make a cross-reference sale. Maybe you’re viewing a promo for a show in between commercials? The internet allows viewers to set an instant reminder, or even record the show on the spot, thereby increasing the effectiveness of the promo. Basically, the internet takes the hope and guesswork out of advertising. Ultimately, it will be the advertisers who seek a safer return on their investment through the internet.

This is going to take time, and even with a sluggish economy, Moore’s law seems to correct itself over time, but making exponential gains during the better years to compensate for times like now.

A few others have adequately dissected your “points” of interest and your fallacious assumptions, and I think quite satisfactorily put the lie to your arguments. So I have only one remaining item to point out to you: “You can blame the lack of progress on the incumbents or their industry, but doesn’t that make my point ?” Your own words – you ARE the incumbent in the industry – your thinking, your ideas, your logic. Old, tired , and soon to be overcome and irrelevant.

From MC> Let me ask you a question. How much investigation have you done into non internet technologies ? Why do you think they dont have more of a future ?

“…there is no doubt that Hulu, if it doesn’t already, will have…monetizable traffic and greater revenues…”

“…the more traffic Hulu generates, the more money it makes.”

Aside from the fact (actually more my opinion based on astute observation) that the majority of television based “free content” is made available by major networks, which has and always will be “free,” if Hulu is generating revenue SOMEONE is paying for it. Just because the end user isn’t bearing the cost doesn’t mean it’s free.

The Indian call centre tells me that peer to peer software is ‘not allowed’ on AOL. Well downloads on the BBC iPlayer are by Kontiki which is peer to peer… It’s a total joke and at this rate Mark may have a point.

I watch very little TV anymore – it’s all crap except for just a few shows. I might watch a total of 6 hours of TV in a week, but I am on the internet for several hours each day. That is a huge change from my lifestyle just 10 years ago. But I don’t want to just sit in front of a computer all day and then again all night.

I gave up my wired telephone line in 2003. It took 5 years for the rest of the United States to start catching up with me (the rest of the world leapfrogged the wired line which says something about the stupidity of wired lines in the modern world).

I gave up my cable subscription almost exactly 1 year ago because I quit my job to start a company. I was fully expecting to go back to cable once I had enough income. 1 year later I am determined to never buy cable/satellite again. I fully expect 5 years from now you will see the same trend as has happened with wired telephone lines.

I do occasionally pay for content though. I bought the finale to Battlestar Galactica last weekend from iTunes for example. I also watch Hulu and pay for a netflix subscription. I am paying for content with Hulu commercials (i don’t mind!) and via my netflix subscription.

Your event horizon is far too short here Mark. You speak as if the world is going to switch today when really it is 5 years down the road that internet TV gets massive. The infrastructure is still being built. That is why only 100K have given up cable (where do you get this number as I know 3 other people who have done this?). Once the infrastructure is in place you will be able to eat pizza, talk on the phone and surf channels with just your two hands.

Regarding bandwidth, how do you come to the conclusion we won’t have enough bandwidth to satisfy security, health and entertainment needs? You are setting this up as a straw man to induce fear without any substantiation of your claim that bandwidth won’t increase fast enough. Cringly disagrees with you: http://www.pbs.org/cringely/pulpit/2008/pulpit_20080718_005261.html. Just as you point out that innovation in applications will find ways to use all available bandwidth, so too will the network magicians at Cisco keep finding ways to increase that bandwidth. At some point there will be a diminishing return for healthcare and security monitoring (I don’t need that dusty corner in my coat closet monitored) and thus make room for entertainment in the bandwidth stream.

On top of all this, your bias (HDNET) is effecting your judgement of reality. Innovation is not limited to the application side of things. The network, the business models, and the delivery mechanisms will be innovated as well. Realize it or watch your business die.