little to no need to pay for the 4 major networks
Agree with that, but have to add a bit more.
People that buy cable, don't do so just for 4 channels. The xBox is also just a media extension of Windows OS's media aspect. XP doesn't have that, and only Vista/Win7 Home Premium and above have that ability. Mac users have to jump through major hoops to hook up to an Xbox or get the little POS AppleTV (which is self-admittedly not good by Jobs). And you'd still have to pay a cable company for your internet connection, so cable coms aren't hurting in any way.
And today is a very topical day for a great example of the downfall of Xbox linking: The NFL Draft. Wanna hope it's posted and watch that tomorrow? I don't! The way it is now, there's no live TV casts of any sport unless it's illegally streamed. You'll hear the score of games over the radio far before it's hosted online. And even then, those individual companies will require a fee just as they do now.
A LOT of things need to change before this even becomes a valid forecast. Instead of 3D TV's, they need to focus on smarter TV's. Networking, larger and more robust operating systems, Support both Windows and Apple (how?), browsers, user interfaces...man the list goes on! To me, an HTPC already does this, not just an Xbox or whatever. But still, that stuff comes far before becoming internet bound. And I'm not losing simple DVR ability to lean on an Xbox that could melt down at any minute. An xbox just isn't that capable.
MSN obviously just found out something we've all known since it's came out: an Xbox is an itty bitty PC. Maybe they just got their NetFlix "watch now" disc in the mail or something. Maybe in 3 years they'll inform us all about HTPC computers?