Digital video recorders (DVRs) may turn out to be the “last gasp” of cable, satellite and other traditional multichannel subscription video providers.  If users can get the same basic functionality (on demand viewing of the shows they want) over the Internet for free or paying for each show rather than a hefty monthly subscription, Who Needs a DVR?, as Nick Wingfield at the WSJ asks:

Among a more narrow band of viewers -– 18- to 34-year-olds -– SRG found that 70% have watched TV online in the past. In contrast, only 36% of that group had watched a show on a TiVo or some other DVR at any time in the past. That last figure is a fairly remarkable statistic. Remember that DVRs have the advantage of playing video back on a device where the vast majority of television consumption has traditionally occurred –- that is, the TV set. Although it’s also possible to watch shows over the Internet on a TV set through a device like Apple TV and Microsoft’s Xbox 360, most people watch online TV shows through their computers — which have inherent disadvantages, like smaller screens and, in most cases, no remote controls.

Indeed, if users are going to buy a piece of hardware, why buy a DVR when they can buy a Roku box or a game console like the XBox 360 that will put Internet-delivered TV on their programming on their “television” (a term that increasingly simply means the biggest LCD in the house, or the one that faces a couch instead of an office chair)— and save money?

This is precisely the point Adam Thierer and I have been hammering away at in this ongoing series.  The availability of TV through the Internet and the ease with which consumers can display that content on a device, and at a time, of their choosing are quickly breaking down the old “gatekeeper” or “bottleneck” power of cable.  Let’s see how long it takes Congress and the FCC to realize that the system of cable regulation created in the analog 1990s no longer makes sense in this truly digital age.

In an essay I posted here back in October called “Cutting the (Video) Cord: The Shift to Online Video Continues” (part of an ongoing series), I reflected on an interesting piece by the Wall Street Journal’s Nick Wingfield’s entitled “Turn On, Tune Out, Click Here.” Wingfield’s article illustrated how rapidly the online video marketplace is growing and noted that so many shows are now available online that many people are cutting the cord entirely by canceling their cable or satellite subscriptions and just downloading everything they want to watch via sites like Hulu and supplmenting that with services like Netflix. In today’s Washington Post, Mike Musgrove writes about these same trends and developments in a column entitled, “TV Breaks Out of the Box.” Musgrove notes:

This has been a big year for both Netflix and online video services like Hulu.com, where people can watch episodes of popular shows such as “The Office” for free, though users do have to sit through a few commercials. When Tina Fey debuted her impression of Sarah Palin on “Saturday Night Live” last month, more people watched the comedy sketch online at NBC.com or Hulu.com than during the show’s broadcast. Last week, YouTube announced that it would start carrying old TV shows and movies from the film studio MGM. As for Netflix, it seems that somebody there has been busy this year. While most customers still use the online video rental site mainly for movie deliveries by mail, the company now has a library of online content available for viewing on your TV through a variety of devices. A $99 appliance from Roku that plugs into your TV set and connects to the Web has been popular among some folks dropping their cable subscriptions. A couple of new, Web-connected Blu-ray players from Samsung and LG Electronics also allow Netflix subscribers to instantly watch titles from the company’s online collection.

Musgrove continues and notes that it’s about more than just Hulu and Netflix:

During a visit to The Washington Post this past summer, Microsoft chief executive Steve Ballmer mentioned that his favorite TV show is “Lost” and that he watches the show online, not on cable and not through a purchase on Apple‘s iTunes service. “I have to admit I’m annoyed by the [ads], but not enough to pay a buck,” he said. Ever have a billionaire make you feel dumb for leading an overly extravagant lifestyle? Ballmer didn’t mention the show’s availability on Microsoft’s Xbox Live service. That’s where I’d been buying and downloading episodes of the show, on an a la carte basis. But starting this week, a major revamp of the Xbox interface makes it possible for owners like me to access the Netflix library without shelling out on a per-title basis. The day after CSI airs, for example, I’ll be able to watch it with a few clicks on the device’s controller. This is available only for people paying for a Netflix subscription, but I’ve already heard some gadget fans, the ones who don’t care about video games very much, wondering if the new feature might make the console a worthwhile purchase. For those interested in checking out some TV on the Web, some networks, like NBC, put almost all of their programming online; others, like HBO, have little content online. One Web site, Cancelcable.com, has a page that tracks where Web surfers can find their favorite shows online.

I was not aware of that CancelCable.com site until I read Musgrove’s article, but it really does show how this migration to alternative video distribution / consumption is picking up steam.

Unfortunately, as I noted in my previous essay, someone forgot to tell the folks in Washington about all this. They’re still busy obsessively regulating broadcast TV and radio as if the 1950s never ended. And they’ve increasingly expanded their regulatory coverage to include cable and satellite even though they are now struggling to keep people from moving to the completely unbundled, a la carte world of online video.

It’s an old story, really: Technology advances; regulation stands still.