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When I buy a track for a dollar - its priced just about right. I get value from that track time and time again. but with most TV shows, once I watch it - it's over. The Season passes cost as much as the DVDs, and so most the time I just grab an episode here or there that I miss. Now, some shows I watch and I want to keep forever because I will watch it again - like Scrubs episodes. But if they make tv rentals and price them at a dollar, they'd have me. I'd probably watch every show I watch on iTunes.
It seems to me the major studios still think their stuff is worth a heck of a lot more than what many people would be willing to pay, ultimately. Especially when you can watch the shows for free on TV albiet with ads.
It will be interesting to see how this shakes out.
One would think the move industry would support Apple here. Hypothetically speaking: I have a mac. Currently there is no LG box and only PC streaming from Netflix... so I rent a movie, get it in the mail, and rip it to my computer easily with handbrake. Pirating made easy, potential P2P ready to go... For the same price and more features, I rent through iTunes and watch in my Apple TV. It's gone in 24 hours, and that's that.
But to return to your point, I dispute you here: if Apple went subscription, they could match (or potentially beat Netlflix), as their overhead is much lower. They need only have 1 video source, and there distribution is digital. Their server farms vs. all the labor (slave as it may be) to mail out those DVD's they had to buy. Correct me if I am missing something, but isn't it a steal for Apple to simple match it?
People have been drooling over the idea of an ITMS subscription for a long time... this would be the winner.