IPTV is on the rise and its eating all in sight. That’s according to analysts Telsyte, who say by 2015 one third of all Pay TV services will be over broadband networks.

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Telsyte study, released yesterday, confirms the rise of subscription TV via Internet with more than 300,000 Australian homes, or one in 10, now accessing an IPTV service in this way.

And Pay TV giant’s Foxtel and Austar (who are soon to merge) may not have the subscription pie to itself for much longer say analysts, citing other “credible services” over broadband including Telstra’s Tbox and FetchTV, that are supplementing the “mature” cable market.

Telco’s Optus, iiNet and Internode already offer FetchTV services at slashed down rates, and now starts at as little as $9.95 a month – a paltry sum compared to Foxtel’s cable, subscription which starts at $45 a month plus a fee for the box.

The subscription TV industry in Australia is currently around $2.7 billion and newer offerings such as FetchTV were aligning better to the future needs of consumers, says Telsyte’s director of research consulting, Chris Coughlan.

Newer IPTV services are offering flexible viewing options with the ability to stream a bundle of channels and access endless libraries of pay-per-view content and new releases, he said.

And Telsyte expects FetchTV will increase its subscriber volumes through its ISP partners especially since Optus began flogging the service last year.

IPTV offers are “well placed” to meet the needs people have with subscription TV, that is ‘too expensive’ and that ‘free to air is good enough,’ according to consumers and industry insiders who spoke to Telsyste.

And that not all Foxel need to worry about, says Coughlan, as the NBN brings forth new headaches.

“Foxtel faces a dilemma as distribution over the NBN requires it to become a retail service provider supplying broadband access, something that its majority shareholder, Telstra, might be reticent to allow,” says Coughlan.

“It also faces challenges with regard to margin erosion if it follows suit with cut-down offerings.”