Old-school DVRs are fighting to stay relevant in an era of add-on devices from the likes of Apple, Roku, and others.

By Peter Suciu

Boom.

FORTUNE -- It used to be that families would gather around the living room TV during prime time to watch their favorite shows together. Even as the living room set has gotten bigger, the audience in front of it continues to shrink. Moreover families aren't watching together -- or even on the same screen.

While DVRs have allowed for time-shifting of programs, devices such as laptops, tablets, and smartphones are stealing away eyeballs. At the same time over-the-top (OTT) services, which offer broadband delivery of content are changing the way people watch shows. These two trends are competing with one another and yet converging at the same time. "When you think about traditional video consumption, it was done on the big screen in the living room," says Greg Ireland, research manager for multiscreen video at research firm IDC. "It used to be that cable was the traditional delivery method. Now there are all these devices that compete with that delivery to the big screen."

These OTT offerings, such as Netflix (NFLX) allow for streaming of content to video game consoles, Blu-ray players, and third-party boxes from Apple (AAPL), Roku, and Google (GOOG). Amazon (AMZN) is even rumored to be developing a box for streaming of its original content. Amazon, which is developing its own TV shows and ordered 14 pilots to be made, already provides TV-anywhere content via its Amazon Prime service.

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Netflix has in essence transitioned from a service that mailed physical discs and now is a streaming service. It is also one with a thin client, so it requires no box and only a connection from the cloud to view the content. (Ironically, Netflix's streaming business grew out a project to create a Netflix-branded set-top box.)

At the same time, numerous devices now allow content from Netflix and other services to be sent to other devices besides the TV in the living room. "Netflix had a brilliant strategy. Now every major paid TV operator has a multi-screen strategy and supports devices including iOS and Android handsets," says Erik Brannon, senior analyst at IHS Screen Digest. As a result even the cable operators are adjusting to the changing business models and are becoming more like Netflix and Amazon in offering content that isn't just sent over the cable to the living room. "The cable providers will be in the video business in a linear fashion for years to come, but on the multi-screen devices these could take a different approach as content providers," adds Brannon. "This is the result of cable's evolution to the ISP business. "

All this has meant that viewers don't need to be home on Sunday night in their living room in front of the TV to watch HBO's Game of Thrones. Now viewers can watch the show on a number of devices, provided there is access to a broadband connection.

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This has also in a very short time grown from TV on the Internet to a PC to numerous other devices. "The PC is actually diminishing as a screen in the multi-screen category," says Joel Espelien, senior analyst of mobile and connected consumer electronics at The Diffusion Group. "This has happened because the PC replacement cycle is extending, and the PC is aging in place. So compare seeing video on an old PC to a new tablet. Likewise a tablet can move around the house, while a phone can even go anywhere."

Together OTT services and TV-anywhere devices could also make the DVR go the way of the VCR adds Espelien. "That infrastructure predates the integration that we now have with the cloud. We are seeing a transition where content was even shared within a house from the local drive. Now we're seeing a transition that allows the content to be accessed from the content provider instead of that local drive."

One exception to this is Dish Network's (DISH) Sling-based technology. While Dish has a limited amount of on-demand content from the various networks and paid-TV channels, it does now offer subscribers the Hopper service, which can record a full block of prime time content from the four major broadcast TV networks. Moreover, this and other content that is recorded to a local DVR in the living room can be accessed via other devices, including a computer, tablet, or smartphone. "The Hopper is actually based on technology that is 10 to 15 years old, but it shows that there is more than one way to skin the cat with multi-screen TV, and the consumer really doesn't care," says Espelien. "This is because of the legacy of TV networks as well as delivery methods."

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And yet other content providers including the cable companies could likely look to similar solutions. "When we look broadly at the strategy for content, the key will increasingly reach subscribers regardless of the device," says Ireland. "We will see this notion of 'TV anywhere' applied across the board, so long as you are an authorized subscriber it will be made available. The challenge and the opportunity is to reach you wherever you are, and so that you aren't watching someone else's content."