This is exactly why HBO keeps their Game of Thrones content which costs $6 million / episode exclusive.
If they started selling episodes for $1.99/each in HD the day after they air they'd see their upfront capital they get from their recurring subscriptions evaporate, and the show would also go away.
The irony is that Game of Thrones is big and successful enough that it probably could make a tidy profit even in the alternative model you mentioned and despite being one of the most pirated shows in the world.
The difficulty with the "adapt or die" reasoning isn't GoT, it's shows 2-10 on the popularity chart, where show 2 has only a fraction of the audience and brings in only a fraction of the revenue but its fans still want the same production values.
If they started selling episodes for $1.99/each in HD the day after they air they'd see their upfront capital they get from their recurring subscriptions evaporate, and the show would also go away.