A decently popular cable show probably has around 2 million weekly viewers. Make it super easy to get the episodes in 720p for $2, and that is $4 million a week in revenue, or $80 million for a 20 episode season (plus merch and dvd collections afterwards). I'm not sure what a season of a given cable show costs to make, but I'd be surprised if it was $80 million.
From the consumer's perspective, we are used to paying $60-100/mo for cable. If episodes cost $2 and we watched four a month, that is $8 per show per month. Our normal $60-100 would buy us 7-12 shows, which I imagine is more than most people follow anyway.
Same could be true for sporting events. I'd gladly pay $4-5 to watch streaming high def games. The company would make a killing off me in March, but I'd still pay it because it's worth it to me to not have to buy a whole cable package just to watch one month of basketball.