outdated thinking... but not (currently) in a significant way, and not in a way that the cable companies would have you believe.
more people are leaving cable every single day. subscriber growth numbers are almost to single digit percentages of new households in the US. This would indicate that in the best case scenario, almost no one in a "new" household is subscribing to cable.. in a more realistic scenario, a sensible portion of those people are signing up for cable, but a majority of them are not, AND cable co's are churning existing customers to boot.
BUT, subscriber numbers are still (barely) growing with on the back of creation of new households. and with apple (forever) rumored to be making a TV, the fight for the living room is more important than ever!! (not really)
so yeah... there are numbers there to support people subscribing to cable and finding interest in this. And most US consumers to have the long view to think "Hey, I might not have cable in two years." I mean my brother STILL thinks I am crazy to suggest he might not have cable service in two years, despite him bitching about the same things every week that eventually led to me dropping it last year.
So, is it a smart play by MS? Sure, there are people who will see this as cool and who can't possibly imagine they would never have cable.
But is it still outdated thinking? Absolutely, because trends show that within the next two years cable co subscriptions will be in decline across the board.. and once it starts, it will snowball. Just ask magazine publishers and newspaper publishers. At that point, and without a live tv box to plug into that HDMI-in... you'll be left with a lesser powered console and no live tv features.
100s of millions have cable TV throughout the world, so it would appear to take at least decades for all shows to become internet-based.
as I mentioned, growth in the US (the biggest cable subscribing country in the world per capita) is anemic, and will likely be in decline within 2-3 years. Outside of the US, growth is even slower than that, and in most countries people are doing only OTA or downloads.
Also, many shows (even high-rated ones) wouldn't exist without the overall cable subscription model. So, some should be careful what they wish for...
cable company hyperbole. once genuine online success is adequately measured (hint: get rid of nielsen) and companies can appropriately monetize videos accordingly, if anything it will be BETTER for most content. Shit like time slot juggling, show order, etc can't be fucked up anymore thus skewing KPIs.