Even though there are now increasing numbers of viable over the top (OTT) online video services, cord-cutting is still nowhere near a mainstream activity according to a new report from ABI Research.

Yet despite finding a failure to date for wholesale rejection of traditional satellite, cable TV and managed IPTV offerings for an OTT service—especially at present either Netflix or Hulu, or as is likely in the near future Apple, Google and Amazon–ABI is warning the pay-TV operators to act now to engage with the concept of online video in a burgeoning connected consumer electronics market that could well gravitate towards the OTT firms.

In its Technology Barometer: Digital Living 1Q 2011 US Survey Results study of 2000 US consumers about consumer electronic products, home networking, and connected devices in their households, ABI found that only a tenth of respondents did not subscribe to a pay-TV service. Furthermore, and despite the received wisdom of many in the industry, ABI discovered a similarly low penetration rate, 11%, of key connected CE devices such as TVs.

Yet even if cord cutting has not occurred at the rate some had previously thought, and certainly not yet at a wholesale level, changes to consumer behaviour, and by extension to the industry status quo, were indeed happening warned the analyst. It noted that consumers with connected devices were increasingly viewing online content, claiming to watch between seven and eight hours weekly of programming streamed to connected CE devices.

These results highlight the need for pay-TV operators to remain innovative said ABI practice director Jason Blackwell: “In a relatively fragmented connected consumer electronics market, the pay-TV package is still the best means to get the widest range of content. In addition some programming such as sports and premium content is still pay-TV centric, even with TV Everywhere initiatives. Now is the time for pay-TV operators to act.

"Currently the services on connected CE platforms are commanded by a few early leaders. Netflix and YouTube, for instance, are the clear consumer favourites for online video, while the divide is even greater for social networking where Facebook captures 97% of social networkers on CE devices compared with 32% for MySpace, the next closest competitor.”