My 3 yr old kids had exactly the same reaction to a nearly identical scenario. Though, we subscribed to cable TV after my father in law threatened to not come visit any more if he couldn't watch his live sports with the clicker...

Publishers/networks are broken. The industry needs something to happen to it like Steam, then Facebook, and finally Apple did to video game publishers. Take the (old) middle men out of the loop. Let content producers "sell" directly to consumers.