Rather than broadcast TV, you subscribe to TV shows that are distributed via BitTorrent, seeded by your chosen provider. Same with movies that can either be streamed for immediate viewing or added to the BitTorrent queue. All your music is provided by a service much like Pandora's, though you can select songs, artists, albums, or genres that are constantly being downloaded to the furnace for when you want them. Video games will be pulled from the provider as well and stored in the same way as any other media. Your digital cameras automatically store all images and movies on the furnace when they are within Wi-Fi range, and you can send photos and movies to family and friends direct to their digital furnace, not via e-mail. Your cell phone continues to be your mobile entertainment center and automatically pulls new music and videos from the furnace much like a Slacker.
Interfacing with the furnace is simple -- all the TVs in the house are actually clients, not just displays. Thus, when you turn on the TV, you have a direct interface to all that media, which can be streamed through the network to any TV or multicast to all TVs. Hopefully, the interface for all this looks like XBMC, which is easily the best media center package ever produced. Of course, because the TV is actually a PC, you can check your e-mail, do videoconferencing with the built-in camera, view Web pages, play video games (yes, PC and console gaming systems will become one), and so forth. Audio-only clients handle the music, are functionally identical to the Sonos Music System, and can pump music to any and all rooms of the house at any time. There will be no need for DVD players, receivers, or physical media of any sort. A flatscreen-embedded client and a remote control are all that's required.
In fact, all of this is possible now -- it's just not yet condensed into easily consumed packages. With a Sonos system, an Xbox running XBMC, and a Linux system running Asterisk and some other hardware, it's possible to do nearly all of this today, with the exception of the ISP integration. That's the biggest hurdle to overcome, but the company that finally figures this out and starts marketing digital furnaces to consumers will find themselves in a terrific position. Home networking can't realistically be completely Wi-Fi, and thus most homes will need to be wired up for data like they were for power nearly a century ago. This will also probably include mainstreaming of home-automation systems, all controlled from the same interface.
We're at the point now where über-geeks like Desmond and I can cobble together dozens of disparate technologies to make this happen, but our less-technical friends and relatives wouldn't even know where to start.
Assuming that the U.S. economy doesn't completely collapse and existing copyright and fair-use laws are modified, I bet that we start seeing products like this within the next three or four years. Within a decade, they'll be common, and within two decades, it'll be rare to see a house or an apartment without it.
At least I hope it happens that quickly. Until then, I'm going to write some code to provide more automation for my homemade version. After all, that's what geeks do.