The average cable user only watches about 9 channels from the hundreds of channels being delivered to their home. If people only watch on a per episode basis, they lose all the advertising dollars and subscription fees from the crap channels. This scares the hell out of them as it means they lose money. They also know people either won't pay or they will only pay a very small amount for this content. You have to admit that doesn't Apple TV seem a little high priced?
The internet TV space should get very interesting as they learn how to monetize this new area. I just hope they realize that if the users don't agree with the price, they will get the content for free one way or another.