Ten Companies The Internet Changed Forever

Most businesses which operated before 1990 had to adapt quickly or be damaged, or even destroyed, as technology quickly evolved.

24/7 Wall St. looked at several industries and picked key companies in them to review how they adapted to the broadband world. These companies fall into three categories. The first are those for which the Internet was a logical extension of their existing enterprises. Netflix is an example of this. The second are those which were slow to adopt to the Web, but eventually made effective use of it. The New York Times and several other large content companies fall into this category. The last is companies which have never effectively made a transition and will probably not survive longer. Merriam-Webster is one of these. It has been replaced by websites that offer competing services for free.

Businesses that began online effectively flanked most of the firms on our list of Companies The Internet Changed Forever. Firms including Borders and Blockbuster fell by the wayside. Other companies adopted the best practices of  their online rivals.  For instance, the real estate industry started a listings site Realtor.com. Craigslist could have taken much of the house marketing business from realtors, but the group effectively found a way to maintain a relationship with customers. Realtor.com also gave home shoppers a more effective way to cut the time that real estate agents have to spend showing homes where buyers have no interest.

This is the 24/7 Wall St. list of Companies The Internet Changed Forever.

10. Netflix

Netflix (NASDAQ: NFLX) revolutionized the video rental industry in 1999 by offering its rental-by-mail service.  The company has now changed the industry again, with its rapidly expanding video streaming service, which allows customers to instantly watch content on their computers or televisions over an Internet connection.  According to the company, more than a third of new subscribers are signing up for the “pure streaming plan,” and that percentage is expected to grow.  The company also states that “streaming is much bigger for [Netflix] than DVD, in hours of entertainment delivered, and streaming is growing much faster than DVD.”  Netflix.com is also the 44th most visited US site, with more than 27 million unique visitors in January, 2011 — a clear sign of streaming media’s growing popularity.

9. New York Times

Like the rest of the newspaper industry, The New York Times has experienced major declines in the circulation and advertising revenue of its printed paper. While some publications, like the Washington Times and Newsday have struggled to stay afloat, the Times’ parent company, The New York Times Company, has become a popular online brand. The New York Times has more than 71 million unique visitors to its properties, while the daily newspaper has only one millions subscribers. The portion of the company’s total revenue that is from online ad sales has gone from 6% in 2005 to 14% in 2009, and it is expected to continue to grow. While this is only a fraction of total earnings, there are far more viewers of the online publication than those of the print newspaper. It is expected that the Times will soon begin charging online subscribers $10-$20 per month.  It is still unclear whether the move will be successful, or will drive customers away.

8. Bank of America

In the past few years, online banking has gone from an added perk for select banks to becoming the modus operandi for most account holders for deposits, withdrawals, balance checks, payments, and most normal interactions that were once the main purpose of branch tellers. As proof of this, Bank of America’s (NYSE BAC) online site, which allows users to access their account, transfer funds, and even pay bills, has become one of the most popular sites on the web. BankofAmerica.com is currently, according to Comscore, the 48th most popular site on the web, with 25.4 million users in January of this year. Overall, 29 million of the bank’s customers currently operate online.

7. Blizzard

Blizzard was, at one point, among the largest video game developers which produced PC titles. The company had many popular titles including the “Diablo,” and “Warcraft” series. The shift to a more online format began with the release of “Starcraft,” a single-player game which came with multi-player capabilities. It was the multi-player aspect, however, which allowed the title to become a worldwide gaming phenomenon. Blizzard’s true breakthrough came with the release of “World of Warcraft” a game which is only played online. The game is the most lucrative and successful video game ever, with more than 12 million subscribers by the end of 2010, and Blizzard continues to reap revenue from these monthly subscribers, rather than merely taking their initial purchase price. The game, along with its add-ons, gross roughly $1 billion each year.

6. Wired

Perhaps it is the result of the publication’s technologically-minded audience, but Wired magazine, is significantly more popular in its online form.  Although well-known, the magazine only has a circulation of about 794,000, making it one of the less popular titles offered by Condé Nast. The magazine’s website, however, receives 37 million pageviews a month, 11.2 million of which come from unique users.  Wired also released a very popular “tablet edition” in late May, 2010, which sold over 100,000 copies in its first month.

5. Charles Schwab

Charles Schwab Corporation (NASDAQ: SCHW) was founded in 1971 as a brick-and-mortar brokerage firm.  It is now one of the largest online brokers in the world.  The company has made a number of moves over the past few years to either entice new customers or retain current ones, including dramatically cutting the costs of online trades.  The company now handles about $1.57 trillion in client assets and 7.9 million brokerage accounts.  Its success speaks to the popularity and subsequent growth being enjoyed by the online brokerage industry. Customers can do a number of things online which they cannot do in a Schwab office or over the phone such as accessing data.

4. Merriam-Webster

At one point one of the premier sources for dictionary and reference material, Merriam-Webster has been upstaged by the instant accessibility of the Internet. Sites like Wikipedia and Dictionary.com have eaten up an overwhelming percentage of the site’s market share to the extent that physical dictionaries and encyclopedias are becoming obsolete for anything other than decoration. The company, as well as its parent Encyclopaedia Britannica, have made a reasonable transition to the web, and merriam-webster.comhas roughly half the monthly pageviews of dictionary.com, according to Quantcast, and stays afloat through ad sales.

3. Prudential

The success of both minor and major brick and mortar real estate brokerages, like Prudential and Douglas Elliman, have been hindered by a loss of market share both from  entirely online property search sites like zillow.com and realtor.com and independent classified sites like craigslist.com. These sites allow prospective buyers and sellers to circumvent brokers altogether by searching for their own properties rather than relying on a broker. Prudential has been able to stem the loss of customers by participating in the larger online broker services like realtor.com and creating their own online brokerage, prudential.com. This become a considerably popular site and allows simple searches based on zip code and desired attributes much like its competitors. The site, however, does not come close the the number of monthly visits some of these other sites generate.

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2. 1-800-Flowers

1-800-Flowers’ business has become so dependent on the Internet that the company is now officially called 1-800-FLOWERS.COM.  Although the company still offers its services over the phone, the majority of revenue is derived from e-commerce.  Of the $235 million in revenue in the quarter ending December 2010, $155 million came from online sales.  The company’s Mobile Flower & Gift Center was named winner of the “Best Mobile App for E-Commerce” award by Digiday’s Publishing & Advertising Awards and Mobile App of the Year Award in the “Best Shopping” category for Retail Info Systems in 2010.  In short, the company is no longer, by any means, primarily a toll-free flower business.

1. H&R Block

H&R Block, once an entirely brick and mortar tax preparation company, was forced onto the web when start-up tax programs and online services like Quickbooks and TurboTax began providing a more convenient way for people to send in their paperwork and have an accountant file their taxes without having to go to an office. H&R Block has now entered the digital tax services arena by necessity, and offers a program called “H&R Best of Both,” in which the client registers their own taxes using a Quickbooks-like software, with the aid of a company representative. The tax preparation company has 22 million customers and an increasingly large percentage of those customers are moving to the company’s software or online services, where they pay to have their taxes prepared digitally.

-Douglas McIntyre, Michael Sauter, Charles Stockdale