They won't understand this, but any business model trying to treat infinitely-copyable digital goods as salable material possessions is going to either change or fail. It will happen in the next 10 years, and no amount of law, security, or resistance is going to stop it. It's already happening with music; Spotify, MOG, Rdio are all viable and spreading.
The network is here. It has made their product into a service whether they like it or not. They need to provide it as a service.
While I mostly agree with you, there is a third option none of us really want to consider. And that's that HBO/MPAA/etc get so efficient at catching and prosecuting piracy, that piracy itself dies off.
Now we at first think, "this is impossible, where there are bits, there are ways to copy said bits". But don't forget What happened with DirecTV at the turn of the century. They implemented an "unhackable" card that stopped all satellite piracy on their network. No biggie, pirates just moved over to the hackable DishNetwork and began purchasing FTA boxes and hacking them to emulate cards. Dish spent a ton of money implementing their new "unhackable" Nagra3 encryption and mostly eradicated the problem. Sure you have a few people doing some sort of private card sharing... but effectively, satellite piracy is dead. I don't want to sound like chicken little... but let's at least consider that these draconian ways could persist and push us back to the dark ages.
And that's that HBO/MPAA/etc get so efficient at catching and prosecuting piracy, that piracy itself dies off.
There are just far too many ways to evade detection. Remember, bits copy easily. Controlling that is very difficult, near-impossible, and with encryption and other tactics, it's darn near impossible to detect.
Reality is not on their side.
EDIT: data point here: an alternate Internet. Imagine what would happen if the media companies really did start to succeed in controlling and suing "piracy" out of existence. This is what would happen: http://www.reddit.com/r/darknetplan
