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I am a cord-cutter myself. I favor shows on the major broadcast networks, and I am not a huge sports fan, so I watch nearly everything on Hulu or Netflix or the broadcasters' websites. However, I view all content on XBMC on a dedicated Linux PC in the living room attached to the VGA port on the back of our new TV. XBMC presents locally stored movies, as well.
XBMC also lets me bring in audio content, including Pandora, my personal music collection (ripped from my purchased CDs), and Internet content like TWiT or Podcast Answer Man.
I am amazed at what XBMC can do!
The only downside to my approach is that by using Linux, there is no hope of Netflix integration right now, since a Linux version of Netflix is not released. For that, I flip over to my Nintendo Wii (which spends about 98% of its time in the Netflix app).
I wonder if Apple could really get enough TV content to be your next cable company. Sure you could drop cable now and go all Apple tv but only if your viewing is limited and does not include live events.
What is the future of cable tv 10 years down the road?