I'm constantly on the lookout for data points that provide insights into how viewer behavior may be changing, particularly with respect to possible shifts from traditional pay-TV offerings to new over-the-top (OTT) alternatives.

That's why a client note from the media analysts at Citigroup this week, which highlighted the ratings drop-off that cable TV networks as a group are experiencing, caught my eye. The Citigroup note follows a recent WSJ report explaining that 11 of the top 15 cable networks have lost audience this year, including a whopping 25% decline at Nickelodeon among its kids 2-11. Citigroup said that for each of the last 6 months, cable's total day ratings decline has actually accelerated, from 2.3% last October to 7.8% in March.

Citigroup's main concern about this ratings drop-off is that cable networks' ad revenue growth is slowing as well, in turn pressuring their media company owners' valuations. While that is surely a worry for investors, an even broader issue to consider is whether the drop-off in cable's ratings is the tip of the OTT iceberg, signaling that the explosion of online-delivered alternatives is beginning to impact viewership patterns. While it's too early to conclude this, all of the elements that would drive OTT's rise - at cable's expense - appear to be falling into place.

Chief among them is growth in connected TVs, enabling the OTT experience to migrate to the living room. This week's report from Leichtman Research, that 38% of U.S. households now have at least one TV connected to the Internet (up from 24% just 2 years ago), is a tangible indicator of how mainstream online video viewing has become. A surprising driver of the connected TV trend has been the massively-popular Xbox, which has lately been rolling out new video apps and is now used more for watching video than for playing games. There is no question that the connected TV trend is gathering steam; within several years the majority of U.S. homes will have one.

Content producers are taking note, pouring more resources than ever into creating high-quality online-only original programming, sometimes blurring the line with what appears on TV itself these days. Yahoo's Erin McPherson shared one such example at this week's IAB conference - the forthcoming "Plugged In" reality series, which looks an awful lot like something you might see on any number of cable channels these days. The series is fully underwritten by Ford's new Focus Electric vehicle. Demonstrating the power of online programming, John Felice, GM of Ford Lincoln Sales explained that fully one-third of his marketing budget has now shifted to digital, with "Plugged In" serving as a template for how new car launches will work going forward.

While Yahoo has been the most prolific in pursuing online-only originals, many others, including YouTube, AOL, MSN, Hulu, Netflix and countless others are hard at work as well. Over the next few weeks, as the Digital Content NewFronts (DCNF) are held, these initiatives are going to garner huge awareness. Advertisers and agencies will be paying close attention, eager to reach elusive audiences that are moving online. And the media will give the DCNFs lots of attention, further educating viewers about online alternatives and helping drive fragmentation.

Last but not least, the pay-TV industry itself seems determined to soften the ground for OTT's success, with rising rates that exacerbate its affordability problem and cause more pay-TV subscribers to question the value. This week brought projections from NPD Group that the average basic rate for pay-TV could soar to $110 by 2020, with the total video bill nearing $200. A serious contributor to these rising rates is the out-of-control licensing cost for sports (highlighted by the Dodgers' recent $2 billion sale). At a time when wages for most are stagnant, pay-TV's exploding cost will surely gain more subscriber scrutiny. Even regulators may finally be taking notice, as the FCC's decision this week to return basic rate regulation back to the city of Boston underscores.

As Citigroup concedes, there are a number of possible contributors to the recent cable ratings declines, such as Netflix viewership, Nielsen adjustments, warmer weather and job gains. All of that is indeed true, but I would contend that the macro factors explained above are creating a giant OTT iceberg for cable networks that is not yet fully quantifiable.  Online video is in the earliest stage of showing its disruptive power.