There would be less incentive toward this kind of piracy if content producers and distributors could get their collective acts together with more liberal licensing. Popcorn Time is winning because it's easier to use and find content than any pay service. Like anything, you compete by making a better product/service -- not by complaining that your competitors are unfair. Of course, they are certainly unfair here, but…
You are asking for the impossible, people are not going to pay for what they can always get at better quality for $0. Fans are happy to curate the art the like and will always do a better work , and for free. The only thing that might make sense is if they distributed an original instead of a copy, i.e. a different movie to every user, a different song etc. Copyright is just not compatible with the digital world, it…
LOL no. Sure there is no shortage of little YouTube videos that replace some kinds of TV content but most people don't have the creative skills required for high quality narrative content. It's precisely because this is in such short supply that popular shows are pirated in such enormous quantities. If there were so much great creativity about, where are all the great indie/ micro-budget/ fan-based/ crowd-sourced films and TV dramas? There are tons of little short films and imaginative trailers to be found on the internet that were filmed for small sums over a few days, but relatively little long-form content because that involves way more time and effort.
The Entertainment industries are largely based on building hype and celebrities, while the cost of production keeps falling thanks to digital production.
That's not true. Some parts of production get cheaper because of digital methods, eg I don't need to pay the same money for film stock, chemical development etc, I can just buy a bunch of hard disks instead, which will be quite a bit cheaper. That's great - instead of spending $100/minute on celluloid every time we run the camera, we can build a set of multi-terabyte arrays and set up a modest asset-management pipeline for a few thousand $.
But that's only one part of production. People still need to eat, lights still need to be put up and equipment moved around, locations still need to be rented, costumes still need to be made, actors need to be paid and so on. You can try and do all these things for free, but if you do it will look ugly, the camera angles will be bad, the subject matter won't be interesting, the actors will looks badly dressed and the performances will be poor. Of course big Hollywood productions are all about marketing glitz and paying huge sums to very famous people (mainly because they predictably attract audiences who want to look at them). but even small-character-driven dramas require a great deal of time and effort to manufacture. It's very very difficult to make a basic 90 min. film that meets basic consumer expectations of technical quality for less than a few hundred thousand dollars. It's possible, of course, but the vast majority of films made for substantially lower budgets are of really bad quality.
There is an oversupply of creativity which obviously should drive their profits down.
But creativity is only one input to a film. You can't solve every problem by just throwing more creative people at it, not least because the more people you throw at a problem, the more they get in each others' way and the lower productivity becomes. Screenplays can often benefit from the advice of additional creative people, but they're really better for being written by committee. Likewise, a lot of what goes on in and around the film production process is just logistics and grunt work.