Even though I've been buying the HD versions of Downton Abbey S2, I disagree on price. I did it because I wanted to see it in HD and my PBS station wasn't giving it to me in HD. But at $3 an episode, I think it's a rip off -- just happens to be a rip-off I was willing to pay for. It wouldn't make sense for me to to do it with more than 1 series at a time though. at $3 (HD) an episode, you're looking at $12-15 a month. At some point, it'd be cheaper to just get cable/satellite.
It is true, and it depends on want/need. I have an SD TV still, so my tv purchases are $2 ($8 a month). There are only one or two shows I can't live without, and even that it depends. So, arbitrarily, for me I was spending $100 on satellite, so that is a lot of shows I could buy and still have a better deal and with no commericals, own them, and be available on my time schedule. However, it really depends on the circumstances. There were only three shows that we (read: she) couldn't live without, and both Tosh.0 and Project Runway are available on their channels respective sites (either in content or outright). Only Top Chef was one that isn't. Other shows that we like are only a season behind on Netflix, so we are good there, and maybe we occasionally "treat" ourselves, but with all of the stuff we have been grabbing OTA, we actually haven't really wanted/needed to do that. We are still episodes behind on some shows.
However, I think there should be some price drop on some of these shows... like $1 an episode for an older show. Heck, it can even be $1 an episode for a current show, but as a rental.
Slightly off-topic: I think more things should be put out there. Look at the success of the comedy special by Louis C.K. who put out his own special for $5, and made MORE money than if he did it for HBO, within one week I think he was over a million dollars with no real advertising and the video is yours to do with as you like (watch unlimited, make a dvd, whatever). The process was painless, and I was able to drop the video right into my Roksbox folder and watch on the Roku