What would it take for ESPN to break free from the cable/satellite companies and associated contracts? If they could go completely a la carte, offer mainly live games and successful programming like College Game Day, they could do massive layoffs, cut the unprofitable content, and get more in the black.
I personally would be irked by that, because it means in football season I'd have to turn on YTTV for FOX, NBC, and CBS, and then also whatever form ESPN's revamped service was. However, from their standpoint, perhaps it would be worth it.
I imagine they'd lose viewers in that model because a certain amount of viewers will only access them through tradition cable/satellite. But with an eye on the future, I think that stuff is dead anyway. Judging by my step-sons and everyone their age I know, generations behind mine aren't "watching TV" anymore. It's stream-or-die, and they'll never have cable unless some massive shift happens. A move like that might hurt in the short-term, but may pay off long term. Not sure.
What I think we've seen over the last 5(ish?) years is that it's not necessarily "stream or die". It was thought that cord-cutting would kill live TV. It didn't. Streaming services have cropped up that offer the same product as traditional linear cable/satellite TV with an alternative delivery method. So if you want live TV, you can pick cable/satellite. Or you can pick Hulu Live TV, YouTube TV, Sling, etc. They're all "streaming" but they're live TV.
The ESPN model was to get included in the default/base offering for live TV. Whether that's cable/satellite, or whether that's streaming live TV. This way they could get revenue from ALL live TV subscribers, not just the ones that watched. Perhaps not as much per subscriber, of course, but they've made the calculation that they're going to get more revenue total by sticking there.
What it would take is for them to determine based on their business model that throwing away the base subscribers on those platforms for higher-value standalone subscribers would be worth it and increase revenue. Because you know the *INSTANT* that they offer a standalone streaming service, every cable/satellite/streaming live TV service will stop offering it in the base package and force anyone who wants to have it to pay for a "sports tier" to keep ESPN. The fear here is that fans who you *think* really value the content only value the content because it's "free" i.e. part of a base plan. And that's something we see here on this board. People saying "yeah, I'm not subscribing to Peacock on top of cable to watch 2-3 CFB games a season involving my team--I'll just watch the highlights." People bitch about games not being on ESPN, but may not care enough to subscribe to something else to follow it. Just as I did when the NFL playoff game was on Peacock. Did I want to watch it? Yes. Did I want to watch it ENOUGH to do that? No.
I'm sure they're watching all the other standalone streaming services as well. The other fear might be that you have subscribers who are year-round subscribers right now, but might become half-year (or less) subscribers in the future because sports are seasonal and they may only be interested in one sport. If you're a hardcore football fan, for example, you don't need ESPN before Labor Day or after the Super Bowl. They don't want to see their business model go the way of some streaming services where a new season of a show drops, everyone who loves that show signs up for 1 month of the service to binge it, and then cancels until the next year when the next season drops.
That tipping point may yet come. But I think for now they've just determined that this is the safer route.