Evidence is beginning to pile up for what everyone has been intuiting for years now: over the top services (OTT) are affecting the pay TV business. The latest figures compiled from company reports shows that penetration of multichannel video program distributor (MVPD) service peaked two years ago, and since then has been steadily decreasing.

Another recent estimate is that the total number of basic video subscribers has dropped for the third straight quarter.

The numbers may be slight, but they are consistent enough to declare them to be identifiable trends.

Analyst Craig Moffett has compiled second quarter results and concluded that while AT&T and Verizon have added video customers (233,000 and 140,000 respectively), their gains do not even come close to offsetting the subscriber losses experienced by most of the top cable operators and both satellite providers. By Moffett’s estimation, the MVPD market lost a total of 380,000 video customers.

“Cord cutting used to be a myth. It isn’t any more,” Moffett wrote. “No, the numbers aren’t huge. But they’re statistically significant.”

Leichtman Research Group (LRG) meanwhile calculates that 86 percent of households nationwide subscribe to some form of multichannel video service, down from 88 percent in 2010. Penetration was 82 percent on 2005.

LRG has similarly noted that MVPDs have experienced video subscriber losses in recent quarters. Looking at the last three years, LRG observed that major MVPDs reported a cumulative increase in the total number of subscribers – albeit of less than 1 percent.

Bruce Leichtman, president and principal analyst for LRG said cord-cutting is not the only factor in play, however, “While some consumers continue to go in and out of the category, economic factors appear to be as strong a force in shaping this market as the emergence of over-the-top alternatives alone."

Penetration has slightly declined however due to a larger increase in the number of rental housing units.

Among TV households that do not currently subscribe to a multi-channel video service, 40 percent subscribe to Netflix, 11 percent to Amazon Prime, and 7 percent to Hulu Plus, according to LRG.

In total, 42 percent of non-subscribers get at least one of these three OTT services, and 58 percent of non-subscribers do not get any.  Overall, this results in 8 percent of all TV households watching over-the-air (OTA) broadcast TV only (down from 10 percent in 2010), and 6 percent watching a combination of OTA and OTT programming.  This group includes about 1 percent of all household that do not subscribe to a multi-channel video service primarily because they can watch all that they want via the Internet or Netflix, LRG reports.

While total video subscribers and video sub penetration both are going down, the trends thus far for broadband subscribership continue to go up.

Other stats from LRG’s eleventh annual study of this topic include:

  • Nationwide, 20 percent of TV households with annual incomes <$50,000 are non-subscribers, compared to 9 percent with incomes >$50,000 – a division that has been fairly consistent for years
  • Mean reported monthly spending on multi-channel video service is $83.25 – an increase of 5.9 percent from last year
  • Multi-channel video subscribers with household incomes >$50,000 spend 18 percent more per month than those with incomes <$50,000
  • 10 percent of non-subscribers had subscribed to a multi-channel video service in the past year, and 7 percent plan to subscribe to a service in the next six months
  • Overall, about 1.4 percent of all TV households paid to subscribe to a service in the past year, but currently do not – a similar rate to the past five years
  • 5 percent of current multi-channel video subscribers did not subscribe at some time in the past two years and just watched programs from the Internet instead