Pay-TV customers largely unaware of 'TV Everywhere' services

June 22, 2012: 11:52 AM ET

Some pay-TV operators seem half-hearted in their efforts to promote their Internet-based offerings.

FORTUNE -- People who closely follow the TV business tend to make a big deal out of the efforts of cable and satellite companies to counter Internet video services like Netflix (NFLX), Hulu, and Amazon Prime (AMZN)  with their own so-called TV Everywhere offerings. Pay-TV subscribers, though, don't seem to yet know or care much about TV Everywhere, according to an analyst with Parks Associates.

Only about one-fifth of pay-TV subscribers are even aware of the so-called TV Everywhere offerings of their cable and satellite providers. And only about half of those who are aware actually use the services with any regularity, according to Parks' Brett Sappington, whose Web presentation on Thursday was written up by Home Media magazine. TV Everywhere is a system of authentication that allows pay-TV subscribers to watch video on computers and other devices over the Internet.

"Is anybody watching these services? Do they even know that these services are available?" asked Parks senior analyst Brett Sappington. "What we found is that by and large the answer is no." This, he said, is largely because the companies aren't doing much to promote those services. (Fortune is owned by Time Warner, a proponent of TV Everywhere.)

It's an old story: industries beset by rapid technological change often tend to concentrate resources and attention on their existing business models and distribution channels, even when they know that their own futures lie elsewhere. Even though upstarts like Netflix are chipping away at their businesses, pay-TV companies are still making nearly all their money from their traditional offerings, including video on demand. The pay-TV industry tends to see TV Everywhere mostly as just one more selling point for their bundled-channel offerings.

Sappington said an executive at satellite TV provider Dish Network told him that "TV Everywhere is just too small. It's really not important enough for me to spend my marketing dollars on TV Everywhere rather than promoting my core service."

That attitude is not surprising considering that, for now, television is overwhelmingly still viewed on TV sets (though even then, a small but increasing amount of that video is being delivered via the Internet and beamed to televisions via various devices). Parks Associates reports that viewers on average spend 20.4 hours per week watching video on a TV, but only 5.8 hours on a computer and minuscule amounts of time on smartphones and tablets. The question for pay-TV companies is how quickly that will change.

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