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Netflix and Hulu have it right IMHO. If all the studios would back them and make their entire libraries, minus the standard theatrical release window, available through services like these there would be no need for DVDs, cable, satellite or any of the traditional distribution methods that the studios, as well as uninformed consumers, cling to like a sinking ship; all the while complaining about how cold the knee deep water is. If you want to minimize piracy, give me a distribution channel that can compete and at a reasonable price. Think along the lines of what you currently pay for cable.
As for TV series on DVD, my personal favorite failure is the Simpsons. It only took them like 10 years to catch up with current episodes on DVD, I could pirate them the day they aired 20 years ago.
While I don't really have a huge problem with the idea of micro transactions, keep them micro. In game item, 1-2 dollars max. Extra hour of content, less than a dollar. Any more then that I can find a plethora of other things in real life that offer more bang of the buck. Personally I evaluate games by price/per of playtime. I refuse to pay $50 for game that is going to keep my attention for less then 50 hours, yes this can include multi-player and overall replayability, any less that and it probably wasn't very fun away.
Just my 2 cents....