I would hope there's no lag streaming from a server that's 50 feet away. Also, considering an onboard server has to store all the on-demand stuff, it's not surprising that there's not a lot of choice.
I wouldn't pay for internet in-flight, I just listen to an audiobook, but apparently they are finding enough people who are willing to pay the absurd rates required to bring that sort of connectivity to an airplane barreling through the air at 500mph to justify not only the installation cost, but also the weight of the routers and servers required to aggregate linear TV, VOD, and satellite internet and last it all back out through Wifi.
I pay at home and for my phone. That's it. That handles anywhere I would go and everything at home. I can wait an hour or two to reconnect to LTE at the next layover. If I travel internationally, I can converse and use an international data plan or get a local SIM.