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Millions of mainstream consumers, spurred by advances in technology and falling prices for high-tech televisions, are switching off cable and turning to the Internet to watch their favorite programs and films.
The trend is expected to accelerate in the next few years, profoundly altering everything from the TVs we buy to the entertainment industry itself.Consumers are watching episodes of "The Office" on their laptops, Droids and iPads. They are streaming movies from Netflix and other digital-era newcomers to their televisions via gaming consoles, Blu-ray disc players and new set-top boxes from Roku, Apple and Google.
An estimated 17 percent of U.S. households now have Blu-ray players and are able to stream programming via the Internet to their televisions. And that doesn't count the millions more who have Xboxes, PlayStations and Wiis that can do the same. Now, leading electronics manufacturers such as Sony, Samsung and Panasonic are building Internet connections into their televisions. The new sets allow users to easily access movies and a vast amount of television programming over the Internet - and without subscribing to cable or satellite. Users also can surf the Net, check e-mail, make Facebook posts and perform other Internet tasks using their televisions.
Increasingly, the TV monitor will become the computer monitor.
Many of the new Internet-enabled TVs also have 3-D capabilities built in. Viewers can slip on glasses and watch a growing amount of programming in three-dimensional hyper-realism.
"Regular TV will be going away soon. It will all be Internet," said John Cameron of Mesa, a self-described technology novice who taps in to most of his television programming via the Internet.
The improving quality and speed of digital delivery is making a difference, as well. Google CEO Eric Schmidt predicted last year that broadband speeds of 100 megabytes per second will be common in the next five years and that the distinctions between the way TV, radio and Web content is delivered will go away. A standard broadband connection now is 512 kilobytes per second, about half a megabyte.
As televisions and computers merge, consumers will have access to a vast amount of programming from a variety of providers - and generally only pay for what they watch.
The digital advances will bring fundamental changes for viewers and for a wide range of entertainment companies from content producers, movie studios and conventional broadcast networks to the cable and satellite companies that traditionally sell large bundles of programming, some of which never gets watched.
Internet TV and 3DTV technologies have been around for a while but have been clumsy and impractical. Recent advances in the way Internet programming is delivered has improved performance and put both on the path toward mainstream use.
Steve Kidera, a spokesman for the Washington, D.C.-based Consumer Electronics Association, said sophisticated broadband-sending equipment now allows more data to be fed into people's homes at faster speeds. More advanced receivers, such as Internet televisions and Roku set-top boxes, do a better job sorting, organizing and playing the data.
The new televisions, which emerged only a few years ago, come with a built-in Internet modem that can connect to the Web wirelessly or via a USB connection. The TVs also come loaded with Internet television-content providers such as Netflix, Amazon, Pandora, Hulu or CNBC.
"These technologies are just coming into their own," Kidera said. "The TVs are more sophisticated, and the prices keep falling. They're definitely hitting a sweet spot with consumers."
Sales of televisions with built-in Internet and 3-D capabilities are soaring. The Consumer Electronics Association predicts that the price of an HDTV television with built-in Internet capabilities will fall below $1,000 in 2011, from $1,750 in 2009. The price of 3-D-ready televisions, which generally also are Internet-ready, is expected to fall to about $1,100 in 2011, compared with $1,300 in 2010.
The association estimates Americans will buy 13.4 million Internet-ready TVs next year, up from 3 million in 2009.
Not all TVs come with the same content providers, however. Consumers need to decide what they want to watch and buy a TV that has programming available. "The industry is just developing," Kidera said. "There are a lot of choices right now, and consumers need to do their homework."
Sales of 3-D televisions in the U.S. also are rising and expected to top 6.2 million in 2011, up from 600,000 in 2009.
Most 3-D televisions require a pair of special glasses to be worn while viewing. But emerging technology allows the 3-D effect to be produced inside the television, eliminating the need for separate glasses.
A special 3-D-enabled television is required to watch 3-D programming. If it is being broadcast over a cable or satellite system, a 3-D-enabled set-top box also is needed. A 3-D-enabled Blue-ray disc player also is needed to watch 3-D movies.
New industry players
As the shift in viewing habits takes hold, the change is likely to profoundly affect program producers, television networks and cable and satellite companies.
The emergence of Internet TV brings Tech Age giants, including Apple Inc., Google Inc., Netflix Inc. and Amazon.com Inc., into the digital-programming distribution business.
Loaded with cash, they could negotiate their own programming deals with studios and content producers and create demand for new types of television content, effectively changing the business model for TV entertainment.
Cable companies that had counted on huge profits from the emerging video-on-demand business now find they have competition from some of the savviest companies on the planet. Industry experts are debating whether Apple, Amazon and Google could become the television networks of the future.
The technology companies could bring the Apple iTunes format to television distribution in which consumers could buy only the songs or programs they want without having to buy the entire CD or programming bundle.
Much as cellphones disrupted the landline business, this could shake the foundation of the present TV-distribution model, which is built on selling bundled programming.
Kidera said viewers who watch only a certain set of channels could choose to pay for only what they watch on the Internet instead of buying a more expensive bundle through cable companies.
"More people are realizing that they can get along without their cable or satellite providers," he said.
Second-ranked Time Warner Cable lost 155,000 subscribers in the third quarter of this year, compared with 64,000 a year earlier, while leader Comcast lost 275,000, twice as many as in the third quarter of 2009.
Metro Phoenix cable-provider Cox Communications is privately held and doesn't report subscriber numbers.
Meanwhile, Netflix's subscription list for the U.S. and Canada grew 35 percent, to about 16 million, in the past year as more people moved to download movies and other programming via the Internet.
That could have a greater business impact on satellite providers Dish Network and DirecTV than on cable companies such as Cox Communications or Comcast.
A high-speed Internet connection is required to access Web programming, and for many people, that is provided by their cable company. Satellite companies generally offer Internet connections via partnerships with telephone companies such as Qwest.
Shift is on
The new technologies require a leap of faith for consumers to cut the cord with cable and satellite companies and shell out big bucks for sophisticated equipment and delivery services that are still evolving.
Timothy Burton of Phoenix watches TV sitcoms and YouTube videos streamed to his television through his gaming console. But he is not quite ready to give up cable. He finds his Internet connection is too slow for watching high-definition videos.
"It's getting better, but the high-definition programs still lag a bit," he said.
"As soon as it gets there and the price points are there, I'll have no problem ditching the cable."