If this were true, it would be happening over the previous 2+ years. I have WatchESPN, it's nice but I wouldn't go to that extreme. Buffering issues, etc like any other streaming service. I'd call it a nice added value that I use once a month, but it is not the end all be all in my opinion. Certainly not something that people switch over.
Actually, watch ESPN is one of several reasons I maintain a dual subscription with cable and DirecTV. I travel for work and several events I want to see are not available in my hotel, and/or I cannot always connect to my Slingbox. WatchESPN makes it easy for me, and I have minimal buffering issues when I am on the road.
Satelliteracer, I usually think you are spot on with your analysis. However, this time I think you are underestimating the importance of streaming content. Satellite in conjunction with streaming capability seems to be the preference for many in the future. With satellite, you in many ways are tied to watching your content on your television. Great for a lot of issues, but not the end all regarding content.
That flexibility to stream, esp. when you don't have satellite access but you have streaming access, is more and more necessary. And, there is additional content through ESPN that one can access if streaming rights are included in the upcoming deal. For instance, I was born in Ohio, and grew up watching University of Akron basketball and football. Can't access many of their feeds because the MAC now is contracted with TWC for broadcasting rights. However, if I had Watch ESPN, I could pull up Akron feeds and stream their games to them play.
I'm not one who things that streaming it the end-all solution to content access. However, streaming content capabilities, esp. with ESPN content, will strengthen D*s marketability w/many.