Recently, I was notified that Hulu was in beta and that my private beta request was approved. I registered a new account and started to look at what hulu is, and what I found was very exciting.
Hulu is a site that my wife and I are now using frequently to watch funny clips and full episodes of our favorite shows. Yesterday I used it to start watching the full movie of The Jerk. It is simply amazing because the quality of the videos is extremely high. It even allows you to watch the videos in full screen mode, which is still in amazing quality, especially for being streamed.
The other thing that impresses me is that advertisements are minimal. Whenever you watch a short clip, you actually do not see any advertisement. When you watch a full episode, like Arrested Development, you see a 15 second advertisement at the beginning and middle of the episode. Which is much better than watching commercials on cable television, or even fast-forwarding over commercials on TV. I am willing to watch 30 seconds of commercial for a show, especially when I do not have to pay anything to get that show outside of having broadband. Again, I think that fast forwarding through commercials is annoying, during this process you still see the commercials and probably end up watching more than 30 seconds worth just skipping back to get just before the show resumes.
When watching The Jerk I saw a 15 second advertisement every 20 minutes or so, which isn't bad at all.
Here is a screenshot to show you the quality of the video. In full screen it is just as impressive.

One thing that this experience demonstrates is that the way we watch tv is changing. If they offered a hulu box for my tv set that would use my broadband connection to allow me to point and click what I watch then I would immediately cancel my cable subscription. It is so much more convenient to select a show to watch and view it immediately. It is especially nice because there is no longer a need to have DVR or manage all of the files on my DVR. If the show was shown already, I should be able to watch it now without having a DVR, and an interface like hulu would allow this experience.
The other reason I believe that tv will shift to an experience like hulu on your tv set is that advertising is so much more effective. You cannot skip the ads, and you really don't feel the need to since it gives you a 15 second count down to when your show resumes. Knowing when commercials will end makes people feel less annoyed that they are viewing a commercial.
It would great if traffic lights had this type of a countdown feature :) On green lights you get a digital countdown next to the light to inform you when a yellow light is coming. Likewise for yellow lights and reds, you are notified when the light will change.
As more advertisers start shifting to buying slots in streamed shows on systems like hulu I expect that we will start seeing new devices that allow you to stream shows onto your tv.