So this pretty much sums up how I have cut the cable from my TV network providers and gone completely Internet-based with all of my media content:
There is plenty of free and commercial software available to convert your DVDs into digital format. I ripped digital copies of all of my DVDs that I own. This enables you the ability to watch your digital library on your TV with a PS3, Apple TV, other device, or by directly connecting your PC/Mac.
Throw the DVDs in storage or garage sale. You wont really need them anymore after this. Use an external harddrive to back up your digital copies so you can restore them if the file ever does become corrupt. If you bought a movie from iTunes and it becomes corrupt you can re-download it free of charge through the iCloud services.
Amazon video is now available on PS3 - All of your digital copy movies purchased through Amazon.com are kept in a digital library and you can stream them at any time.
Getting bored of your Movie library? Subscribe to Netflix and/or Hulu+ for $8-$16 a month. This gives you access to tons of movies and TV shows streaming directly to your TV. This also has plenty of shows that kids will love.
The NFL sunday ticket will be offered for this year for PS3 owners and does not require DirecTV service. This means you can watch almost all of the NFL games every Sunday live over the Internet. So far the pricing for this service sounds pretty high and so I am not sure if I will try it or not yet. If you are desperate to watch a sport then there are some websites that stream them for free. Try Google and you might find front row sports.
Unless you live on the edge of the earth where Internet Speeds are atrocious, lag should not be a problem. I live pretty close to the edge of the Earth and I rarely have a problem myself. If you experience lag, there may be other ISP providers in your area that can offer you a better deal with faster speeds. If you are going on a trip and you want to take a movie mobile, download the video to your phone or tablet so that you avoid streaming it from a slow wifi connection or mobile data connection.
It has been roughly 6 months since we have cut the cable which means we have saved nearly $600. I am very satisfied and have no regrets.