How cheap should it be. There will be no service that people will pay for if they pirate content. The service they want is a service where they dont have to pay.
If you are pirating you are not a customer. Any business man should not be concerned with trying to gain your market, its not profitable.
TV and the film industry have decided they'll make more money by making a worse product and doing everything they can to prevent users from finding alternatives
If this was a natural state of affairs there might be considerations about morals, but the current rules and laws came about through direct intervention by these same companies
A poor businessman. A good businessman sees the black market and determines if they can provide a similar service in the white market. Clearly there are consumers and they want something that they aren't getting already.
And in this case, things like popcorn time have a great interface and are easier than most streaming services.
People want to see new movies in their homes (and I always laugh at the "no movie should be reduced to this shrinks from theater screen to computer screen, because clearly people like it that way).
And people want to see population and good movies at the top of their lists, not problem garbage. There's a lot of people that complain about even Netflix because of this. Their recommendation engine isn't what it used to be.
There's a lot more reasons too. People pirate for many more reasons than because it's free, though that definitely is a big component. But people seem to be ignoring these other reasons.
There's a market, or two, here that aren't being served. A good businessman would serve them.