By Aaron Pressman
March 1, 2018

The rate of consumers dropping their cable and satellite TV packages hit the highest level ever in the fourth quarter, while Internet TV subscribership grew strongly.

After companies from cable giant Comcast to satellite TV titan AT&T, which owns DirecTV, reported their fourth quarter results, the total number of pay TV subscribers dropped 3.4% from a year earlier, the highest rate of decline since the trend of cord cutting emerged in 2010, analysts at MoffettNathanson Research reported on Thursday. With almost 500,000 customers leaving in the fourth quarter alone, that left the industry with about 83 million households still subscribing.

The calculations don’t even include the growing number of households that didn’t subscribe to a pay TV service in the first place, known as “cord nevers” rather than “cord cutters.” But in total, approximately 13.5 million households do not pay for traditional forms of TV service currently, the firm estimated. The 3.4% rate of decline in 2017 increased from 2% in the fourth quarter of 2016 and 1% a year before that. The trend is consistent with other surveys and data points. For example, 79% of households paid for traditional cable or satellite service in last year’s annual survey by the Leichtman Research Group, down from 84% three years earlier and the all-time peak of 88% in 2010.

The cable bundle has become increasingly unappealing as consumers have turned in droves to more flexible and less expensive video offerings, from services like Netflix and Hulu that feature traditional TV and movie formats, to shorter programming from YouTube, Facebook, and a host of others. The cord cutting trend, which started decades ago with consumers dropping landline phones for mobile numbers, is even starting to hit Internet service.

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The trend is also hurting the stock prices of most cable and telecommunications stocks. Shares of Comcast (cmcsa), the largest cable provider, are down 9% so far in 2018, while AT&T (t) has lost 6% and Verizon (vz) is down 9%. Altice USA (atus) is off 13%, while Charter Communications (chtr) is a lone bright spot, up 3%.

But offsetting the damage to the entertainment industry is the growing number of people signing up for packages of TV channels delivered over the Internet by services like Google’s (googl) YouTube TV , Dish Network’s (dish) Sling TV and AT&T’s DirecTV Now. At about $40 to $60 per month, the online offerings are considerably cheaper than the average cable TV charge of over $100. Almost 4.6 million people subscribed to the five leading Internet TV packages at the end of 2017, MoffettNathanson estimated, led by Sling TV’s 2.2 million customers. The total has more than doubled from just 2 million people at the end of 2016.

Still, the growth of the Internet services won’t make up for all of the revenue lost from the cable and satellite cuts. “For all distributors, this is mostly just varying degrees of…bad,” analyst Craig Moffett wrote. As with the shrinking print advertising business, the replacement of “analog dollars for digital pennies still applies,” he added.

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