Blonder Tongue Laboratories, a maker of video and broadband equipment for cable operators and other service providers, said it has appointed industry vet Steve Necessary to its board of directors.

Necessary, who had headed up all major video initiatives at Cox for more than a dozen years, retired from Cox at the end of 2017.

Necessary, who last served as EVP, product development and management at Cox for the company’s business and residential service portfolios, still maintains a relationship with Cox on a part-time consulting basis, Blonder Tongue said.

During his career, Necessary was also an exec at VOD pioneer Concurrent Computer Corp. and Scientific Atlanta (sold to Cisco Systems in 2005), including a stint as CEO of PowerTV, once a video software subsidiary of S-A.

"We are extremely pleased to welcome Steve Necessary to our Board of Directors,” Robert J. Pallé, Blonder Tongue’s president and CEO, said in a statement. “Throughout his career, Steve has demonstrated a proven record of success through his leadership and intimate, in-depth knowledge of the cable and communications markets. As such, Steve is in a unique position to provide us both product and market guidance from the multiple-system-operator point of view."

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With new business models proliferating almost as fast as new consumer-electronics devices at this year’s CES, TV executives are recalling 2016 as a year of landmark changes that will produce even more profound developments in 2017.

“In the last year, there has been more change in the video business than we saw in probably the past five years,” said Matthew Strauss, executive vice president and general manager of video and entertainment services for Comcast Cable. “We’re just continuing to find the competitive landscape shifting. There are more services being delivered over the top to consumers. There is the growth and proliferation of Internet-connected TV devices like Roku, Apple TV or Amazon Fire. And you are also seeing new services that are delivering bundled over the top channels like Sling TV, Sony’s PlayStation Vue and DirecTV Now.”

In response, programmers and operators have introduced a flurry of new products. “In terms of video, this has been one of the biggest for Cox in all the years I’ve been here,” Steve Necessary, executive vice president of product development and management at Cox Communications, said.

Less obviously, operators and programmers continue to make massive investments in their technology infrastructures with important implications for their offerings in 2017 and beyond.

“As a company, we are investing and positioning content to be consumed on more and more platforms every day,” Discovery Communications chief technology officer John Honeycutt said, stressing that the programmer is rapidly deploying new cloud and software-based infrastructures so it can adapt to consumer needs and quickly roll out new services. “We are in the middle of a revolution in our supply chain.”

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DIGITAL-FIRST REALITY

Much of this reflects longstanding changes in consumer behavior and the underlying economics of the TV, digital and media industries.

Vincent Letang, executive vice president of global market intelligence at Magna, said 2016 was the first year digital advertising exceeded total TV advertising in the U.S., garnering 39% of the total ad spend versus 37.4% for TV. Digital advertising is set to exceed total TV advertising worldwide for the first time in 2017, he added.

“We are forecasting that in five years, digital will grow to 56.0% of total advertising [in 2021 in the U.S.] while TV will plateau at 29.9%,” he said. Meanwhile, content creators and distributors are following the flow of money into digital media, fueling rapid growth in consumption of TV shows on mobile devices, computers and TVs connected to the Internet.

“The cliché of how consumers ‘want my content when I want it, where I want it and how I want it,’ is now a truism,” Mike Vorhaus, president of Magid Advisors at Frank N. Magid Associates, said. “Just five years ago, it was hard to find a lot of content. But now, in 2017, I’m really the captain of my media ship in a way that was not true in the past.”

Given ongoing rapid growth in the usage of mobile and connected TVs, it is difficult to call digital video “mature.” But researchers stress that the tectonic changes in how video is consumed and delivered have already made digital media a central part of the TV business.

“After four or five years of talking about alternative ways to access video and watching significant growth in its usage, we are now at a point where it is pretty much established,” Howard Horowitz, president and founder of Horowitz Research, said. “It’s not a fly in the ointment, but part of the business. Digital self-managed access to video content is with us and mostly that is a good thing for all the players.”

DISRUPTIVE GAINS

Others agree. After ticking off a long list of new products and initiatives designed to realign their offerings with newer consumer behavior, Comcast’s Strauss said: “Our third-quarter video results were the best we’ve had in 10 years. We added 32,000 video customers, which is an 80,000 improvement year over year. And if you look at the last 12 months, we are video-positive.”

Some programmers have been buffeted by the changes, which have hurt ratings, but those that have aggressively moved to capitalize on the newer delivery platforms are pleased with the results.

Bernadette Aulestia, executive vice president of worldwide distribution for HBO, noted that the launch of the OTT service HBO Now has allowed the programmer to tap into new markets and see healthy growth in the overall business. “Less than 1% of [the OTT] HBO Now subscribers are coming from our linear multichannel subscribers,” she said.

Executives from Dish Network and AT&T cited similar experiences with their respective OTT channel bundles, Sling TV and DirecTV Now, which are designed in part to tap into viewers outside of the pay TV ecosystem.

“There are about 20 million households in the U.S. that are either not engaged with pay TV or have opted to leave the pay TV ecosystems,” Tony Goncalves, senior vice president of strategy and business development for AT&T Entertainment Group, said.

That doesn’t mean that the industry can sit back and pretend it will be business as usual in 2017.

An acceleration in the decline in pay TV subscribers has caused Magna to revise its estimates of pay TV subscribers downward. There is also a great deal of uncertainty about the ad market.

These trends raise important questions about the changing use of video on various platforms — traditional TV, mobile, Internet-connected TVs, set-top boxes and other technologies. How these trends will impact the health of the industry and the kind of products that get launched in 2017 is the subject of the next story.

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With the prospect of its first full year of positive video subscriber growth staring it in the face, Comcast can point to many factors that have helped push the operator over the hump, but none perhaps with as much impact as its state-of-the art operating platform, X1.

Comcast introduced X1 in 2012 and to date it is available in about 45% of the cable company’s footprint, reaching 50% by the end of the year. With X1, Comcast customers get a state-of-the-art user interface, cloud digital video recording, home-streaming capabilities and other features, like an interactive voice remote. Those features have proven to be popular with customers.

For the cable company, the X1 architecture allows it to more easily overlay new services and products, essentially via software downloads from the cloud.

X1 also is having a big impact on customer retention and the uptake of new services. Customers of the platform are less likely to churn, DVR take rates for X1 users are about 3 times that of non X1 customers and X1 users are twice as likely to buy pay-per-view products.

FROM PLANS TO REALITY

Comcast Cable CEO Neil Smit said that X1 was still in the planning stages when he joined the company in 2010, adding that the platform dovetailed nicely with Comcast’s emphasis on video and the renewed focus on the customer experience.

In its final iteration, X1 had all the bells and whistles associated with new technology rollouts. But Smit said that at its core, X1’s message is simple.

“We invested in X1 and the on-demand content and the different platforms at a time when there was not a lot of significant investment going on,” Smit said. “Video is about great content but also about ease of discovery of that content — if you have great content and make it easy to find and you bring up new recommendations of things. We believed from the beginning we could achieve that.”

X1 was a collaborative effort from the beginning, Comcast executive vice president and chief operating officer Dave Watson said.

“One of the first things he did was prioritize the list,” Watson said in an interview. “We had so many things going on, a lot of promising things that were emerging post the early stages of DOCSIS — more VOD, all the standards we had invested in. The infrastructure stuff was for the most part coming to an end, but the product stuff was not. That’s where Neil came in and helped prioritize. X1 was at the top of the list.”

Watson added that in addition to X1’s chief architect — technology president Tony Werner and his team — Smit brought in other disciplines and executives to help shape the product.

“One of the things Neil did, he included [Comcast chairman and CEO] Brian [Roberts] in a lot of the early iterations of feature design,” Watson said. “A lot of others that were engaged — the marketing team, the rest of Tony Werner’s engineering team, there were a lot of people that were very focused.”

That sense of collaboration has been part of Comcast’s DNA for years, Watson said, but it was especially evident in the formation of X1.

INCLUSIVE PROCESS

“It goes back to that belief that an effective team gets better results,” Watson said. “You don’t roll out things at scale of this magnitude without having great teams on it.”

That kind of collaboration also led to one of the X1’s most popular features, the voice remote. The remote, which allows customers to search for shows and launch apps with voice commands, is one of the most popular features of X1. To date, about 10 million voice remotes have been deployed to Comcast customers.

Watson said Roberts championed the voice remote. “The engineering team had developed the capability, but Brian was focused on [the idea] that this could be special,” he said. “Neil then brought it to a whole other level. Neil got with his team and said, ‘Let’s scale this.’ And that’s what happened.”

Comcast recently incorporated the Netflix app into the X1, allowing for subscribers to the SVOD service to more easily access it. While that may have been unheard of several years ago — Netflix is considered a cable competitor by some — Smit said it fits in with Comcast’s overall philosophy.

“We’re all about saving the customers’ time,” Smit said. “Their time is precious and we have to respect that. The Netflix integration was saving the customer’s time; it was making it more convenient for them. They didn’t have to switch over to input B, they could just speak into their voice remote and say ‘Find Orange is the New Black.’ It was grounded in making the customer’s life more convenient and saving them time.”

The X1 has received rave reviews: Geekwire called it an “Escalade,” referring to the high-end Cadillac SUV. And Comcast doesn’t plan to keep the operating system to itself. It has already licensed X1 to two cable operators, Cox Communications in the U.S. and Shaw Communications in Canada, and hopes to add more licensees in the future.

WORKS FOR COX, TOO

At Cox, which markets X1 as New Contour, the platform has lived up to and exceeded expectations, executive vice president of product development and management Steve Necessary said.

Cox began rolling out New Contour in one market with 3,000 customers at the beginning of the year; by April, it was deployed in all 21 of the cable operator’s territories. By the end of the year, Necessary said Cox expects to have nearly 600,000 New Contour customers.

Because Cox has had the product less than a year, the operator hasn’t seen the full impact of the platform yet. But he said the company has seen a reduction in early life churn and customer satisfaction has risen. Necessary said New Contour has resulted in higher Net Promoter Scores — a more than 20-point lift for X1 users. And VOD usage has roughly doubled for X1 customers.

“The metrics we have to date are very positive and support or exceed our business expectations,” Necessary said. He expects the growth trajectory in 2016 to continue into next year.

Cox has promoted company vet Steve Necessary to executive vice president of product development and management, a role that spans the organization's residential and commercial businesses.

Necessary, previously VP of video product development and management, reports to Cox president Pat Esser. Necessary has been leading the broader on an interim role for the past several months, said Cox, which recently signed a national deal to license Comcast’s X1 platform for a next-gen version of Cox’s Contour multiscreen video product.

“Steve has done a tremendous job leading the product team on an interim basis, driving the rapid expansion of residential Gigabit Internet, transition to all digital video service and the recent launch of the new Contour TV,” Esser said in a statement. “He and the product organization will continue to push for more rapid development cycles to deliver more choice and capabilities to help our customers connect to the things they care about most.”

Necessary joined Cox in January 2005, and has previously held exec slots at Concurrent Computer Corporation, at Scientific-Atlanta (now part of Cisco Systems), and PowerTV, once a video software subsidiary of S-A. 

He is also a member of Cable and Telecommunications Association for Marketing (CTAM), the Society of Cable Telecommunications Engineers (SCTE) and is on the board of directors for InDemand. Necessary is also an emeritus member of the board of the Atlanta Ballet and Christians in Cable and is active in Mount Pisgah United Methodist Church.

He received a bachelor's degree in engineering economic systems from the Georgia Institute of Technology and earned his MBA from Harvard Business School.