It's a similar situation to the record album. Folks long wondered why they should pay $18 for an album when all they wanted was 1-2 songs. Or belatedly found out that only 1-2 songs were any good and they rightly felt burned. Record companies didn't listen to the unmet needs of the consumer and they found an alternative, democratized method of getting what they really wanted: songs. Record companies still insist on making albums and fighting the voice of the customer that wants songs, portability, convenience, and per-unit cheap.
People pause and consider $18 purchases. Is it really worth it or can I live without it? Evidence cheap DVDs and Starbucks: people don't pause and consider <$10. It's disposable and if it makes them feel better they just do it. iTunes proved that $1.99 per song had much more energy behind it than $18 per album. Lately I've been gorging on $2 Rock Band downloads for songs I'd never go buy (or already have) the album for.
Cable companies face either giving the consumer what they want or finding the consumers creating their own path. Youtube, hulu, network sites, etc. allow us to get those single episodes that we want, when we want it. Folks get broadband for a variety of reasons, and will increasingly find that they are less likely to sit in front of the tube, surfing or otherwise being on someone else's schedule. They spam us with so many channels and crap, we no longer just tune in to "see what's on".
Cheers,
Chris