The Pay TV business is just massive and the "bundle" model is so entrenched that it's going to take a long time to unwind.

But it will unwind and it will be more along the lines of how you buy other media products (books, music) - a lower margin business than Pay TV is now, for sure.
The marginal costs of good content are high, and so good content will be expensive, but I expect the media business to evolve into tiers:

"Premium" is ad-free, first run shows. You buy shows by the season for about $40 each. This is how you can get some content today, but there are still time and place limits.
"Regular" is ad-supported first-run shows, you pay about $10 per network per month. This is close to what we have now (most people watch only 8 channels, so video part of your cable bill is about $80 a month)

"Economy" is ad-supported second-run shows. Ads are unkippable (like Hulu.com today.