Half the 24 existing digital TV channels face high risks of being driven out of business next year in the face of regulatory uncertainty, an excessive number of players and a limited amount of ad sponsors.
Only four channels are dominating digital TV screens, led by free stations Channels 3 and 7, leaving little room for other operators.
"This is inevitable," one broadcasting industry veteran said.
"If you look around the business landscape right now, the digital TV market is dominated by only three or four operators. We'll see more channels going out of business, as they cannot survive an imperfect competitive environment."
Only those with innovative, attractive content and interactive services will survive in the game, the source said.
"Decades of experience have taught businesses that only three brands will come to a consumer's mind regardless of the industry," the source continued.
Thai TV Co, the operator of two digital channels, said it would be the first digital TV company to close its doors.
The source called the exit of Thai TV, owned by media veteran Pantipa Sakulchai, "just the tip of the iceberg".
True Corporation chief executive Suphachai Chearavanont said the local digital TV industry was squeezing channel operators dry as they competed for a relatively flat ad budget to support operating costs.
If their channels are not attractive enough, they will be confronted with the threat of being substituted by cable TV or a multimedia-on-demand apps service.
"Content is king for this industry," Mr Suphachai said, adding that content providers were the only clear winners in this game.
He said most channels simply provided viewers what mass-market youths wanted to watch such as entertainment, news and sports.
Channels that differentiate themselves by offering niche programming have only a tiny fraction of high-end consumers. They also compete with emerging streaming media platforms that hold abundant resources of exclusive and popular international programmes.
Other industry analysts agree Thailand's digital TV business model is not sustainable in the long term.
Thawee Udomkitchote, managing director of Samart Engineering, the digital set-top box arm of Samart Corporation, said commercial digital TV operators could not reach a large audience, muting their bargaining power with advertisers.
The bargaining power of programme or data providers will increase when the digital channels fill out their content, making viewers feel it is necessary to buy set-top boxes, he said.
Mr Suphachai said digital TV was but one of many industries being revolutionised by young consumers' rapidly changing lifestyles. He acknowledged it was clear something fundamental had to change about the current TV model.
Streaming video offers an attractive range of viewing options thanks to greater stability from wireless broadband.
Internet TV allows viewers to watch TV series and access on-demand or pay-per-view shows via the internet, while over-the-top services that deliver live broadcasts via an internet connection make it clear the digital and pay TV markets are ripe for disruption.