Is the Pay-TV Model in Trouble? Thanks to the 'Cord Never' Generation, It May Be

The pay-TV market as we know it is threatened by a new generation of "technology-savvy, budget-conscious consumers who are taking advantage of the availability of high-speed Internet connections and the proliferation of smartphones, tablets, lower-cost TVs and other gadgets that make it easy to consume downloadable shows in a snap," Bloomberg reports.

"The shift in viewing habits is putting pressure on cable, satellite and phone companies by pinching subscriber numbers, which may have a knock-on effect on revenue growth," the report says. "The impact on the $80 billion pay-TV industry is already being felt, with 2013 on pace to be the first year ever that total U.S. pay-TV subscriptions will decline, falling to 100.8 million from 100.9 million last year, according to researcher IHS."

In the past three years -- a period during which 3.2 million new U.S. households were set up -- the pay-TV industry added only 250,000 subscriptions, the piece reports, citing SNL Kagan figures.

Said Rich Greenfield, an analyst at BTIG LLC in New York: “It’s hard not to be concerned that there’s a growing population growing up not using [pay TV]. Alternatives are growing by the day.”

Bloomberg calls this new group the "cord never" generation, reporting: "Cord nevers are set to accelerate the erosion that cable and satellite TV providers are already suffering at the hands of phone companies. AT&T Inc. and Verizon Communications Inc. have taken 11 percent of the market for paid-TV subscriptions after introducing competing services in the past decade. Cable commands 55 percent of the market, while satellite TV has 34 percent, according to IHS."