New technologies and players in the video distribution industry are threatening the viability of the pay television sector.

Independent telecoms analyst firm Ovum, in a new report released on Thursday, pointed out that as a result of the new forms of competition, pay-TV subscription growth has slowed down in several Australian markets.

The competition includes free-to-air digital TV and Web-based offerings, said Jonathan Doran, Ovum principal analyst.

"While these changes have already started to occur, their impact will become increasingly pronounced over the next five years. This will force a shift in the strategic approaches of pay TV operators if they are to ensure their continued success and survival," Mr Doran said in the report.

Although the pay TV operators have shown their ability to battle the threats posed by the changing landscape by turning challenges to their advantage, the options are indicators of the evolution in the TV market environment which can no longer be reversed, Mr Doran said.

Ovum's advice to pay TV operators is to review current approaches to content packaging to ensure that consumers are given choice and quality through creative and shrewd packaging and pricing initiatives.

"This will involve developing services that resemble open, Web-delivered offerings, while at the same time differentiating from over-the-top players based on service quality, reliability, and device interoperability," Mr Doran explained.

In many western countries, despite the alternatives offered by service providers such as Netflix, Hulu and Sony, only about 3 per cent of cable TV customers have cut their subscriptions in favor of Internet-based options, according to The Hollywood Reporter.

The daily reported that Sony has plans to offer small bundles of channels using Internet-connected TV sets and other gadgets such as Blu-ray players and PlayStation 3 consoles. Experts, however, said that Sony should expect a lot of resistance for consumers before the new service takes off the ground.

Besides competition from cable and satellite providers, Sony's other rivals are tech firms such as Microsoft which offers limited TV through Xbox 360, Google with its Google TV and Apple which has Apple TV.

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