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SVOD providers are particularly problematic for broadcasters and their advertising partners, because they hurt ad supported television in a number of ways: Consumers with SVOD subscriptions replace time spent watching ad supported television with ad free SVOD watching With so much of online video viewing time spent watching ad free, those quality ad opportunities that are available are more expensive to buy Consumers get a decreased tolerance for advertising as they grow used to seeing content uninterrupted.

U.S. ad agencies spent 2% less on broadcast TV networks in the 4th quarter of 2014 and 16% less on national cable TV. The company also found that, if you exclude the Olympics, broadcast ad revenue would have declined 2% for the full year (it increased 4.1% when the Olympics are included.)

online originals are growing prodigiously and a good proportion of that inventory will provide advertising opportunities. For example, Alex Carloss, YouTube’s head of original programming, announced the site would be funding more original programming in the same way it did in 2012.

The vast majority of Americans – 95 percent – still watch television using traditional cable or satellite options, according to Nielsen. But the number of households that choose to opt out of cable or satellite TV is on the rise, from 2 million in 2007 to 5 million in 2013, Nielsen’s data show.

“This scares the bejesus out of the cable and satellite people,” said Jim Barry, a spokesman for the Consumer Electronics Association in Arlington, Va. “I think it’s going to change the business model.”

A main driver behind the high cost of cable and satellite in recent years is the expensive license fees networks pay sports leagues to broadcast their games. The cost gets passed on to consumers to pay for the “bundles” of channels they get with their cable satellite subscriptions, whether they plan to watch sports or not.

A new report by Magid Advisors surveyed 2,400 consumers and found that cord cutting is not only on the rise, but it's happening much quicker than industry watchers anticipated.

When asked the reasons why they would consider canceling pay TV service, 77 percent of very likely cord cutters cited over-the-top video as a key factor. Half of respondents said they were satisfied with online streaming options like Netflix and Hulu, while 30 percent said pay TV was too expensive.

The new service, which could launch in the coming months, likely will feature original series and may include licensed programming, these people said. As part of the project, Amazon has held talks with the creators of "Betas," a series about a Silicon Valley startup that Amazon produced last year for Prime, these people said.

The new data Amazon collects about viewers' television or music preferences could allow it to deliver more targeted advertising, including for products available on its retail website. Think Adidas shoe ads alongside Run-D.M.C.'s "MyAdidas" music video.