The numbers here don't make sense. Most people are paying $50 per month for cable, which supports the current industry. If they all switch to paying ~$50 per month in a different model (whatever it is), an industry of the same size will be supported.
The subscription "all you can eat" model is great. The thing that needs to change from current cable is that I should be able to watch it wherever and whenever I want (and pay not to have ads). The issue right now is that the contractual relationships are so complex that no one is able to cut through the mess to put together the right offering.
I really don't think it's a cost issue. It's a lack of choice issue. I pay about $65 a month for IPTV service (plus another $15 - $20 a month for the privilege of having HD channels and to rent a few set-top boxes) and I still don't get at least a few "premium" channels that I would really like to have, just because I am at the upper limit of what I'm willing to spend. I don't want to be force fed a bunch of channels I will never watch. The model is broken.
That assumes consumer behavior remains the same. But we know that people consume much more with all you can eat than with al la carte. And since the marginal cost to deliver incremental households is near zero, a la carte makes even less sense.
The subscription "all you can eat" model is great. The thing that needs to change from current cable is that I should be able to watch it wherever and whenever I want (and pay not to have ads). The issue right now is that the contractual relationships are so complex that no one is able to cut through the mess to put together the right offering.