For the technically competent, I’d recommend setting up a Home Theater PC. A $70 AMD A6-5400K should handle all of your HTPC needs. If you’d like to game as well, consider a more expensive A8 or A10. Of course, you need to couple this with a case, PSU, motherboard, RAM, HDD, wireless 802.11n adapter, wireless keyboard/mouse, and OS. Most people who go this route aren’t starting from scratch, but if you are, it’s a significantly more expensive option than a set top box.
Navigate Computer With Mouse & Keyboard: You connect your computer to the HDTV (for the big screen) and then proceed to go to your favorite websites like hulu.com, Netflix and others (see some options above) to view your shows. You can use the Hulu Desktop application. You can also watch shows that you've downloaded from Amazon, Itunes or other online video sources – or your own videos. You will most likely need a wireless keyboard and mouse to make this easy – although it isn't required.
Not everything is free: Although over-the-air TV reception and many streaming channels are free, there are many streaming channels and services that require a monthly subscription or pay-per-view fee. If you only pay for one or two subscription-based or pay-per-view services, you can save money over cable/satellite. However, if you keep adding more pay services, those fees can add up, and you might again find yourself with a hefty monthly subscription or pay-per-view bill that could rival that old cable/satellite bill.
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The first change is time. TV can suck you in and not let you go. It’s easy to justify killing 15 or 20 minutes when you have a few minutes of down time. But sometimes that 15 or 20 minutes can turn into an hour or two. We are now more intentional with what we watch and when we watch it. Channel surfing is a thing of the past. I find TV much more enjoyable when I plan my viewing time – that way I don’t feel guilty or feel like I could be doing something more productive.
If you want—or need—to see a significant number of your local teams’ games, I’m going to stop right here. This is one area where streaming services can’t yet fully deliver. Local games are generally exclusive to regional sports networks, and you’ll still need cable for that. There’s also the issue of some online services being a little more unstable than die-hard fans might like. Dish’s Sling TV failed for many customers during this weekend’s NCAA Final Four action, leading the company to issue an apology.
Then there's the multistream issue. If you want to watch more than one program at the same time -- for example, on your living room TV and on a bedroom TV, or the main TV and a tablet -- you'll want to make sure the service you're watching has enough simultaneous streams. Some of the least expensive services only allow one stream at a time, and if you try to watch a second, it's blocked.