A recent survey showed that 27% of respondents (the biggest slice) believed "Online Video / Internet TV" would be the dominant tech meme for 2007 (browser based apps came in at 22%, Mobile Web at 15%. Rich Internet Apps - WPF/E for instance - came in lower but IMO that represents the time it's going to take for people to get to grips with what that technology can deliver).
It's certainly something that's been a long time coming. The huge success of YouTube, Google Video, AOL Video and of course Soapbox proves that there is a huge appetite for non-studio produced content (and certainly a huge pool of people keen to produce that content).
Projects like the forthcoming Venice Project (from the creators of Skype), the Democracy video player/sharing platform, Tioti, tVadio and a number of other independent peer to peer video (P2PTV) distribution mechanisms are promising to deliver the best of that content (both user generated and studio produced) in an efficient, high quality, free/low-cost manner. However with some of those the legality of some of the content is questionable. With others the breadth of available content is also going to be a limiting factor. For many users the sheer bandwidth requirements are also going to be an issue if users are on capped or shaped plans that limit their consumption (or have heavy financial penalties for high usage)
The production companies themselves are not standing idly by while this happens. In the UK the BBC are about to launch iMP - a p2p application which allows users to watch shows up to 7 days after they've aired, and Channel4 have a similar service. NineMSN in Australia is offering a Catch-up TV service (download, not p2p) and in the US networks are making episodes of popular shows available via the iTunes store (wonder what that will do for syndication of the lists of CSI:, Lost, 24 and Battlestar Galactica?) though as it's mostly targeting the video capable iPods that quality isn't as good as HDTV yet. ClickStar and RealNetworks are both heavy-weight players in this space. Even Netflix (the DVD home delivery pioneers) are looking at electronic delivery as an option.
In conjunction with various networks Microsoft are making TV episodes and movies available (in SD and HD quality) for both Xbox and Media Center Edition users for download and rental.
So what does this mean for consumers?
Well, in the short term I think lots of confusion. Different services will offer access to different slices of content and you may well end up having to subscribe to three of four different providers to get the mix of Sci-Fi Movies, first-run TV drama and home-made bizarre juggling accident videos. Like the iTunes music store and PlaysForSure there will be incompatible DRM solutions, different restrictions on viewing, archiving and sharing and platforms supported.
During 2007 I think we'll see a whole bunch of new start-ups offering "the" best solution but it's going to take most of the year to work the kinks out, get a decent momentum (and convince the mainstream producers that it's a viable proposition) and let the dust of acquisitions settle.
Meantime the advertisers will be looking at new ways to monetise the content!