Massively increased computing power, large, high-resolution monitors, and relatively cheap and fast download rates have turned the computer into a threat to traditional TV broadcasting, both pay and free to air. To save itself, TV is having to become a lot more like the web. ''It's becoming a semantic question whether television is a URL on the internet or the internet is a channel on the television set,'' says Jeff Cole, a futurist and the director of the Centre for the Digital Future at the University of Southern California. ''The key word is convergence.'' Dr Cole says the old model of television broadcasting is almost irrelevant already: ''Teenagers barely understand the concept of watching television on a broadcast network's schedule,'' he says. ''If you talk to them about the days when you used to have a favourite show and you had to be home before it started and you couldn't leave the house until after it aired …'' He lets the absurdity of that proposition hang in the air, even though most Australians grew up with it. But the ability to record now and watch later - which began with the introduction of the VCR to living rooms in the late 1970s - has fundamentally changed the game. The industry calls it ''time-shifting'', and it poses a major threat to the business model of free-to-air broadcasting. The free-to-air model relies on a network being able to deliver an audience of a certain size and demographic at a set time. That guarantee allows commercial networks to sell advertising spaces at a set rate - hence the importance of TV ratings. Advertisers are, effectively, buying eyeballs.

But when those eyeballs have the opportunity to record and watch later - at a time when they are less inclined to make grocery-buying decisions, for instance - or to fast-forward through the ads entirely, the business model falters. The problem has become so serious that from December 27, OzTAM - which collects ratings for the networks - will for the first time begin tracking time-shift audiences. Anyone in the ratings sample group who records a program to a personal video recorder and watches it within seven days will, for the first time, be counted as a viewer. In the US, where Nielsen has been tracking time-shift audiences within three days of broadcast, ratings have been boosted by as much as 25 per cent for some programs. That's great news for traditional broadcasters. But time-shifting is just one of the fronts on which they are vulnerable. Video on demand is another. Whether legally or illegally, the tech-savvy have been able to search for programming online for years, and download to watch on their computers. Now the same service is downloaded or streamed over the internet and watched on the television screen. In the last three weeks alone, Australian viewers have been promised the following: Telstra's T-Box, which will allow paid content to be streamed or recorded, with unmetered downloads from BigPond's libraries; the ABC iView player, which can now play content on the TV via Sony's PlayStation 3; and a hook-up between iiNet and TiVo to stream free, unmetered content to the television.

In the US, the shift is even more advanced. Hulu - a joint venture between News Corp and NBC - allows subscribers to stream a vast array of content legally and free (for now at least; Hulu is expected to start charging next year). Originally, that content could only be watched on the computer, but software recently released allows it to be relayed to the TV via the PlayStation, X-Box and Wii gaming consoles. Hulu was launched in 2008 and already has more than 42 million users. In October, it delivered 856 million downloads, almost twice as many as the preceding month. According to the head of digital marketing at IBM Australia, Martin Walsh, ''the Australian TV networks had the opportunity to joint venture to bring Hulu to Australia, but they turned it down''. While they may rue that decision, another US service provider, Netflix, is rumoured to be working with TV manufacturers to develop a set that would eliminate the need for peripheral devices such as game consoles or computer hard drives. In Ericsson's Asia-Pacific TV Centre in Port Melbourne, a ''techspert'' is talking through the company's vision of the future. He's demonstrating a set-up that will allow multiple TVs or computers or other devices scattered throughout a household to stream content individually while remaining networked so that each user can send messages to the others - ''dinner's ready, come to the table'', for instance - or even to keep tabs on the household energy use or grandma's medical records. As for entertainment, he says, ''everything that's ever been made could quite feasibly be stored on servers, for you to download instantly, whenever you want''. ''It's bringing the web and internet experience into one,'' says Kursten Leins, Ericsson's strategic marketing manager. ''The vision has been there for a long time. The reality is it's actually happening now.''

That reality is called Internet Protocol Television, or IPTV. It is, many believe, where everything is heading, though Leins argues there are significant hurdles. First, it will not become fully realised until the national broadband network is rolled out - we need fast download rates to make full use of the offerings - and that's at least five years off. And second, there are issues of governance. ''The biggest stumbling block is regulation,'' Leins says. ''At the moment you have a separate regime for telecommunications and another for broadcasting. When you're talking about the blending of all these services, it's the regulation that will get in the way, not the technology.'' But those issues are certain to be resolved because the Federal Government is committed to the digital future. It is the key to giving Australia a ''competitive edge'', in the Government's view, and will enable cheaper and faster delivery of everything from health care to education. And, of course, it will also facilitate an explosion of choice in entertainment. So, with the viewer liberated from the tyranny of the TV programmer, will the networks and pay TV operators cease to exist? Maybe, says futurist Jeff Cole. ''We're still going to have scheduling for people over the age of 50 or 60, but that's gradually going to diminish. It will go mostly to on-demand.''