TV somewhere, sometimes: Pay TV’s rocky path towards a streaming future

Ask any TV executive about TV Everywhere, and you’re going to hear plenty of praise for the industry’s efforts to stream live and on-demand programming to pay TV subscribers. But if you keep them talking, you’re inevitably going to get a long laundry list of problems.

That’s because TV Everywhere has not only been plagued with technical and political challenges, it’s also arguably missed the mark on one of its key goals: Networks and pay TV operators started rolling out TV Everywhere services like HBO Go and Showtime Anytime to more effectively compete with internet-only services like Netflix. Recent numbers from Sandvine however show that HBO Go isn’t even coming close to Netflix’s engagement levels, with even niche offerings like the video game-focused streaming service getting more traffic than HBO’s streaming service.

Still, TV Everywhere has been a success in an unlikely area: It has forced networks and operators to think more like Netflix, and radically change their development to embrace mobile devices and much shorter release cycles — all of which is helping them to prepare themselves for a streaming future.

Only 17 percent of consumers even know about TV Everywhere

The industry’s complicated love affair with TV Everywhere was on full display at the recent Cable Show in Los Angeles, where a panel of executives from operators and networks celebrated TV Everywhere as a success only to be reminded by Cable & Telecommunications Association for Marketing CEO John lansing that by the end of 2013, only 17 percent of pay TV subscribers even knew about TV Everywhere apps and services.

And even consumers that do know of these apps only use them sporadically. Turner SVP Jeremy Legg reported that his networks see a lot of engagement for marquee sports events like March Madness, but during other times, participation is lacking. A lot of this has to do with challenges around authentication, he argued. TV Everywhere sites and apps require users to sign in with the accounts they set up for their pay TV provider’s online services, but many consumers don’t remember these credentials, or don’t even know how to find them.

“If we can’t find a way as an industry to make this simpler for consumers, then shame on us,” Legg said, adding: “I’m embarrassed how we rolled this out.”

A patchwork of apps, services and industry politics

The industry is starting to make authentication easier by using IP addresses to automatically grant access. If you’re inside your home and access the internet through your cable service, you’re increasingly automatically able to just start streaming without the need to enter any account information. However, this kind of auto-logon may work with some apps for the customers of operator A, with other apps for operator B and not at all with operator C.

That’s because TV Everywhere is as much about business deals as it is about technical challenges. Networks have to strike agreements with each and every operator to make authentication work, and the complex relationship between these parties can further confuse consumers.

HBO, for example, has been streaming its HBO Go service to game consoles, Roku and Apple (s AAPL) TV streaming boxes as well as smart TVs. Comcast’s ( CMCSK) cable TV subscribers can’t use any of these devices, because the company would prefer that its customers use its own Xfinity app instead. NBC streamed the recent Winter Olympics to authenticated viewers, but some cable subscribers found themselves locked out because their cable line-up didn’t include one or two channels required to access the TV Everywhere streams.

All of this is hard to grasp for consumers, and a brand that overpromised and under-delivered didn’t exactly help TV Everywhere’s case. Seriously, wouldn’t you expect that TV Everywhere actually plays everywhere? Sure, it does, except when you leave your home, and it quickly becomes TV somewhere, sometimes.

Comcast’s Xfinity Go app streams 53 channels, but not any of the broadcasters, or Comedy Central, or HBO. Time Warner Cable only streams 24 channels on the go, and Charter has only seven. In some case, some of that programming may be available through network apps, but each of them will once again require authentication.

The silver lining: it’s changing TV, everywhere

Of course, there are still upsides to TV Everywhere. Not only is it being embraced by some viewers — at times even too many — it also started to change how networks and especially operators are approaching the development of new apps and services. Pay TV operators used to be stuck in a long development cycle dictated by the pace of cable box rollouts. Every few years, a new generation of hardware would come along and require new approaches, but updates were far and few in between.

These days, that’s changed pretty much everywhere. Operators are developing TV Everywhere mobile apps, which are frequently updated, and often become a bit of a testing ground for new features and design ideas that eventually find their way to the TV screen. And TV Everywhere even allows operators to think outside of the box, and embrace connected devices like smart TVs and streaming boxes, which often are far more powerful than that set-top box that a consumer got when he signed up for cable years ago.

And once operators and networks embrace devices like Roku or the Xbox, (S MSFT) they find themselves directly next to Netflix, YouTube ( GOOG) and Hulu, which forces them to learn from and more directly compete with these online services. The result are better-looking, easier to use TV services that may one day actually be able to live up to their promise.