I'd argue that it is user experience rather than distribution speed that is the main thing preventing on demand TV reaching mass appeal. 99% of the population are happy with the big screen in the corner of the room, even if the little one on their lap gives them access to far more content. Once the content can easily move between the two, then we start to see a fully on demand viewing experience available back on the TV screen. I had expected that the hardware that will deliver this will become available (probably iTunes/Apple TV based) and have appeal outside of early adopters once Kangaroo made huge great piles of back catalogue and nostalgia available, and marketed it heavily (using iPlayer as a benchmark for my future guessing).
The obvious problem with mass take-up of on demand is that it takes away the role of TV as a conversation starter - the water cooler moment. This won't happen overnight, but it will slowly eat away at the central role that TV plays in the national psyche. Which is ironic, when brands that have historically relied on TV for advertising are starting to realise that communication might actually be a two-way process.
Gamers on the other hand have been able to converse via the TV set for years, since the launch of XBox Live in 2002. Over 60% of US owners pay the annual subscription for the service. So it is no surprise that the next release is rumoured to include a much wider range of social recommendation tools, for a range of gaming and entertainment content.
And this type of social feature is starting to make its way into the next generation of entertainment hubs - Boxee is a downloadable app that organises all the content on a PC or streamed live from the likes of Hulu. It is designed on the basis that it will be viewed on a big screen and operated via remote, and it has social recommendation at its heart - it can't actually share content with friends, but can recommend. You would expect that the next move from here is along the lines of CBS's ideas about individual groups of friends all being able to start off viewing simultaneously and comment over the TV screen.
This begs the question of whether the big social networks are missing a trick - surely Facebook TV would be a viable option? Again, it depends on having the infrastructure to deliver content to the TV screen (both the broadband distribution and the hardware in the home), but television is inherently social so the readymade friend network and app environment would give this type of application a distinct advantage.
The real trick being really missed though is gaming devices. The social element is already built in, and they already bridge the gap between laptop and TV, and there will be a huge gap in the market in the UK around Kangaroo launch time. 6 months on from Hulu launching in the US the hardware manufacturers are still chasing their tails.
Could XBox or Playstation running Kangaroo on a Facebook app be coming to a living room near you?