It all started with three words during Disney’s earnings call with analysts. When talking about the company’s ESPN segment, CEO Bog Iger mentioned that Disney had experienced “some subscriber loss.”

The stock slid 8% and is currently down almost 10% from its high before the earnings report came out. Disney isn’t the only one hurting, though. Viacom fell 14% after reporting lower-than-expected revenue due to weakness in its cable TV business. Time Warner, Fox, Comcast and CBS were also hit hard.

A warning of things to come?

The big issue here is the price of bundled cable. With online streaming services like Netflix, Amazon Prime Video and Hulu giving subscribers big value for small dollars, “cord cutting” is becoming a major problem for cable companies, which typically bundle channels together and price them much higher.

ESPN has always been thought to be immune to the cord cutting craze. After all, the vast majority of people watch sports live, and the network offers a lot of value to sports fanatics all over the world. Nevertheless, subscriber growth fell during the recent quarter and Disney has reduced its growth expectations moving forward.

Many of these companies are trying to compete with streaming services by partnering with them. Creating content for or selling content to streaming companies like Netflix may seem like a good idea in the short term. After all, Netflix is paying big money for great shows, picking up NBC’s The Blacklist for $2 million an episode and almost that much for FOX’s Gotham, which hadn’t even premiered at the time the deal was closed.

But the long term issue is this: With streaming subscribers able to watch their favorite shows after the season is over or all at once with original series, why would they pay a lot more to watch them on cable?

"There's a secular shift going on in media, a shift in consumption of information to entertainment, we've seen it in advertising for the last several quarters. There's been a worry that you're going to see it in affiliate fees, which are directly tied to the number of subscribers to those channels," said research analyst Chris Marangi, who covers cable, satellite and entertainment companies for Gabelli Funds.

Advertisers are also shifting more toward mobile because it provides better margins, leaving cable out to dry.

Who wins

Cable companies’ loss is Netflix’s gain. Shares saw a jump from $121.15 the day Disney reported its earnings to $126.45 two days later. Amazon also saw a short pop, although its impact isn’t as heavy because its Prime Video is only a small part of its core business.

Some cable companies are trying streaming services of their own, which may help them alleviate the pain of cable subscriber loss. Dish Network, for example, launched Sling TV, which offers a slimmed-down $20/month package including channels like ESPN, AMC, TNT and the History Channel.

If more cable companies can do this, it’s likely that they’ll be able to survive the exodus. Otherwise, investors are in for some long-term losses. Anyoption™ is the world's leading binary options trading platform. Founded in 2008, anyoption was the first financial trading platform that made it possible for anyone to invest and profit from the global stock market through trading binary options.

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