As Pay TV Pie Crumbles, Question Is Where Spending Goes

The years-long debate about whether mainstream TV networks are vulnerable to pay TV cord-cutting should now be over, thanks to Walt Disney’s disclosure on Tuesday that its near-term cable channel profits would be affected by ESPN subscriber losses. Little wonder that media stocks plunged on Wednesday.

The more interesting question now is how big the market will be for pay TV’s likely replacement, online subscription video, in revenue terms. That should be the primary issue not only for public market investors in companies like Netflix but venture capitalists putting money into subscription-video startups.