It's not like the entertainment industry wasn't warned that the Internet was coming, that the proliferation of digital would eventually lead to widely spread copying. Remember the mantra that information wants to be free? It's true, and that mantra began circulating in or before the 1980's. The entertainment industry had decades to come to grip with digital media and copyability, but the music industry blew it.
Disney rethinking broadcast? (10/1/2005 10:04:37 AM, by Ken "Caesar" Fisher, arsTechnica): Discusses how the new Disney CEO is talking about how they need to rethink their media delivery. In particular, why shouldn't they deliver and sell their content online?
It's getting more and more feasible to sell movies online. For example a few months ago Plan 9 from Outer Space became public domain, and is now available for download in several formats. The file is a bit over a gigabyte, and is DVD quality. It only took a couple hours to download on my DSL connection, and played just fine. It's not too outrageous to have people do the same for paid content. And, as the article points out, the "theft" of movies online is just a symptom of the movie industry not doing what people want.
For example, Dr. Who is available again as a current TV series. But, since I don't a) even own a TV and b) do not live in the United Kingdom, c) I can't watch the broadcasts. If I'm ever going to see any of these new episodes, I'll have to wait the several years for some DVD distributor to get the idea that the public might want to see them. On the other hand, the BBC could very well sell and distribute the digital version online today and I could be buying the show from the BBC right now. I want to watch the show, and I'm sure if that desire were strong enough I could find some way to download recordings from somewhere. It might be an "illegal" copy but I might not care if it simply let me watch the TV series. If, however, the BBC were making it easily available online for a reasonable fee, I wouldn't at all mind paying for it.
There's no essential reason why television has to be sent as electromagnetic signals. It's just an accident of technological history that television is sent over the air. One can easily conceive of other distribution models. In fact, distributing it over the Internet for direct payment could reduce or remove the need for advertising, which would greatly enhance the viewability in my opinion. The reason I don't watch television today, besides the time-waster aspect, is the advertising.