The current system really isn't working for consumers because, as Peter points out, the incumbents are trying to protect their business models rather than thinking about how they can provide a better experience to the end consumer. The On-Demand and TV Anywhere from the cable companies leave much to be desired.
In an ideal world I would l would like a service where I could watch any movie ever produced and any TV show that was ever on in addition to live sports with the ability to watch a game as soon as it starts as if I recorded it myself. Think of it as Netflix if they had all movies and TV rather than a small subset plus the sports streaming. And I would want it available on pretty much any device - TV, phone, tablet, etc, again just like Netflix. This is kind of like some of the streaming music services available today - I pay a monthly fee and I can listen to whatever I want from whatever device I want.
Here is why "the man" should like this - I am willing to pay more than I pay today for TV plus online services plus DVD/BR purchases - I would pay $150-$200 per month. So there is more money for the content producers so they should like this - but who gets the money will be different.
The sad thing is that the closest solution to what I am suggesting is one of the illegal options, with the sports streaming added on. The Napster analogy is a very good one.
I don't think the old models will hold on for much longer. There will be losers (like all of the crappy TV channels that no one watches today but survive due to bundling) but consumers should be the winners.
FYI - My current media costs are cable $80/monthly, Netflix $8, Amazon Prime (US) $8, Unblockus $5, optical media - $30 for a total of about $130/month.