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NBC probably failed at thinking big(screen)

My guess to the low quality of the stream was the old school thinking that everyone who watches "online" watches on their computer. They probably felt that for the cost and the output the speeds they put out were fine for the much smaller screen of a computer/laptop/tablet/etc.
What they failed to realize is the hundreds of thousands of us that are putting our computers on our TVs. And with TVs becoming more like a giant monitor for a built-in computer (look at this year's CES TVs) this is ancient thinking.
That and Comcast/NBC would rather not let go of their subscribers just yet.