The evidence of a pay-TV cord-cutting effect is growing.
Most likely to cancel their pay-TV service? Owners of Internet-connected TVs.
Those with TVs connected to the Net are twice as likely as those with non-Internet-connected TVs to be "highly inclined" to cancel their current pay-TV service, finds a new study from research firm The Diffusion Group.
Overall, about 7% of pay-TV subscribers said they were highly likely to cancel their service in the next six months, the firm's survey of 1,878 pay-TV users conducted during the first quarter of 2013 found. But those who had connected their TVs to the Net had even higher rates of cord-cutting potential. Nearly 9% (8.8%) said they were highly likely to cut the cord, compared with 3.5% of those who had not connected their TV to the Net.
Industry observers have expected that high-speed Internet connectivity and the availability of online video from services such as Netflix, Amazon Instant Video and Hulu would lead to consumers cutting or trimming pay-TV bills.
Today there are many ways to get online video to the TV - game consoles, Blu-ray players, set-top boxes - and many TVs have Wi-Fi and apps on board. Net-connected TVs appear to be a significant factor that spurs cord cutting, says Michael Greeson, president of The Diffusion Group.
"Something has happened in the minds of these consumers when they have been exposed to these online video services via these Net-connected TVs," he says. "They are more likely to cut the cord because of the availability of these other services."
Overall, pay TV providers lost about 210,000 video subscribers in the second quarter of 2013, says Vijay Jayant of the International Strategy and Investment Group. Cable losses of about 420,000 and satellite TV losses of 160,000, were partially offset by 370,000 subscribers gained by telecom companies such as AT&T and Verizon.
Pay-TV penetration peaked from 2006 to 2009 at about 82% of U.S. homes, according to PricewaterhouseCoopers. That's likely to fall to 79% in 2014, the consulting firm estimates.
TV providers have tried to hold onto subscribers by bundling TV, telephone and other services, as well as adding access to programming on tablets and smartphones.
But the growth in Net TV and cost of programming - as evidenced by the ongoing dispute between CBS and Time Warner Cable - "is almost like a perfect storm" that's unraveling the traditional pay-TV providers' grip. "They are not going to be the only game in town, and they are losing their leverage," Greeson says.