The cord-cutting phenomenon, while very real, still hasn’t inflicted mortal wounds on the pay-TV biz.

But if the trend of consumers rejecting cable or satellite video subscriptions accelerates — and research shows younger Americans are less likely to have pay TV than their elders — the industry could spiral into a painful retreat.

For the first time over a full-year period, the U.S. pay-TV segment in 2013 registered a decline in subscriptions, according to a report from research firm SNL Kagan. The aggregate 251,000 net loss among cable, satellite and telco TV providers was infinitesimal — representing just 0.25% of the estimated 100.9 million total pay-TV households at year-end, according to the firm.

That’s just a drop in the bucket, to be sure. But what’s worrisome for pay-TV providers and networks alike is that millennials (ages 16-34) are considerably more likely than non-millennials (35-64) to not have a cable or satellite subscription. Among millennials, 13% say they have no pay TV, compared with 9% of the older cohort, according to a Verizon survey of 1,000 consumers.

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Industry execs have downplayed the fact that the younger demo is less inclined to have pay-TV subscriptions; the sentiment is that once they move out of their parents’ house, they’ll pay for cable. But the data tells a different story: In 2013, occupied housing units in the U.S. increased by a net of 323,000 last year to nearly 115 million, according to SNL Kagan estimates. That means household penetration of pay TV declined for the year.

Dish Network founder and chairman Charlie Ergen is one of the few industry leaders who’s been vocal about a looming crisis.

“We’re losing a whole generation of individuals who aren’t going to buy into (the pay-TV) model because they only want one particular show or they want to watch the show wherever they can or they want to watch it on their schedule, and so that generation is not signing up to satellite or cable or phone video today,” he told analysts on Dish’s earnings call last month.

To target those “cord nevers,” Dish is assembling a stripped-down virtual pay TV service that would be delivered over broadband. Under the satcaster’s deal with Disney announced this month, Dish has streaming rights to five cable networks, including ESPN and ABC. But the service would be priced far lower than traditional pay TV packages, pointing to a future of lower industry revenue even if “virtual MSO” concept takes off.

The pay-TV sector’s 2013 net loss was driven by cable providers, which collectively lost 2 million video subscriptions for the full year and 388,000 in the fourth quarter, according to SNL Kagan. Comcast, for example, dropped 305,000 TV customers for the full year and Time Warner Cable shed 825,000.

Dish and DirecTV grew, although more slowly than in previous years, with a year-end gain of 170,000 subscribers (after adding 101,000 subscribers in the fourth quarter). Telco TV providers, led by Verizon FiOS and AT&T U-verse — still relatively new entrants — added 1.6 million subs to reach 10.7 million at the end of 2013.