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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.

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Mr. Krikorian says there are opportunities for startups to change the TV viewing experience, which has largely remained the same even as Web video has taken over TV screens. For instance, new services could offer more interactivity, he says.

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Joe Lonsdale
Joe Lonsdale
Founding Partner, Eight
Chamath Palihapitiya
Chamath Palihapitiya
Founder & Managing Partner, SocialCapital
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Tina Sharkey
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Ruchi Sanghvi
Ruchi Sanghvi
VP Operations, Dropbox
At the very least, startups will have to try different business models than simply aggregating on-demand entertainment content.