Cable, or consoles? At the rate Sony and Microsoft are going in expanding their video rental services, I'd go with consoles.

According to research and consulting firm The Diffusion Group, most people would choose the same thing in the future, abandoning cable companies and satellite TV operators, and turning to consoles for on-demand video services instead:

There is a bit of a ‘value vacuum’ developing around today’s PayTV offerings. Rising dissatisfaction with service value, the lack of flexibility implicit in tiered strategies, and a growing interest in watching online video on the TV have combined to create a unique opportunity for alternative video services -- an opportunity not at all lost on console vendors.

Microsoft and Sony know that today’s console gamers are perfectly suited for new TV offerings. The segment is dominated by males between the ages of 18 and 35 -- a prized advertising demographic -- with little sense of loyalty to their 'local' cable or telephone company. They are also heavy viewers of online video and quite comfortable spending money for online digital media.

Simply stated, console vendors are inimitably positioned for success in the OTT (over-the-top) space because their gaming audience already owns the enabling device, and they are highly likely to already have an Internet-to-TV relationship with the vendor.

They also predict that by 2012, 190 million households will own a next-gen console, with 80% of these connecting to the Internet. They also infer that 75% of these will use the console's video services at least a couple of times each week. Personally though, I think iTunes will be a more likely substitute for video services.

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