We saw a fundamental shift in the way people watch TV this year

There are more ways than ever to watch TV without actually paying for a cable or satellite subscription.

An increasing number of people are choosing to do just that.

The pay TV industry - led by companies like Comcast, Time Warner Cable, DirecTV, and Verizon - lost 560,000 subscribers in the second quarter of the year, according to estimates from MoffettNathanson, a media and telecommunications research firm.

As the analysts note, the industry typically loses subscribers during this time of year. But last year during the second quarter the industry lost 321,000, so this represents a 76% uptick.

"It isn't pretty," the analysts write in a recent note to clients.

"Cord-cutting did indeed accelerate markedly in the second quarter, just as we were afraid it would."

And focusing just on subscriber losses doesn't give the full picture, MoffettNathanson notes, because people who move into new homes aren't subscribing to TV service. These mostly younger people, out on their own for the first time, are so-called "cord-nevers" because they've never subscribed to cable or satellite TV.

The research firm estimates that adjusting for the number of new households that have formed over the past year, "cord-cutting and/or cord-nevering has claimed nearly 2 million households."

"The penetration of pay TV is falling much more rapidly than is the rate of pay TV subscriptions," the analysts write.

Indeed, the number of households in the US that pay for broadband internet but don't pay for TV has increased by more than 20%, from 9.7 million in the first quarter of 2013 to 11.7 million the same time this year, according to SNL Kagan, a media research firm.

In addition to Netflix, Hulu, and Amazon, which have been streaming video to subscribers for years, a handful of new services have launched in recent months to address this growing segment of consumers. Sling TV, HBO, Showtime, Nickelodeon, and Comcast, among others, have all come out with products that stream TV over the internet.

Unlike typical TV packages, you can pay for these services month-to-month, quit anytime and watch on many devices and outside of your home. The MoffettNathanson report said the increased service options probably contributed to pay TV's decline this year.

Shares of companies that own TV networks, like Time Warner (CNN, TBS), Disney (ESPN, ABC), Viacom (Comedy Central, MTV), Discovery Communications (Discovery, TLC), Twenty-First Century Fox (Fox, Fox News, FX), and CBS (CBS, Showtime) fell sharply last week over worries of cord cutting.

Shares of Netflix, meanwhile, which now has more than 62 million paying members, reached record highs.

Even though an increasing number of people aren't paying for TV, around 100 million households in the US still do. And the majority of Americans pay a cable company for broadband, so even if they drop their pay TV subscriptions, they're still paying the cable company for internet service.