The winner of our corporate Baftas – the greatest companies of the past decade
Share price and sheer market clout has made video-streaming service Netflix the stand-out star of the stock titans in 2019, says Matthew Lynn.
What was the greatest company of the past decade? You could make a case for Amazon, of course, as the internet retailing powerhouse moved into devices, media, cloud computing and dozens of other businesses and made itself briefly the largest company in the world. Or Microsoft, as the company of the 1990s made a stunning comeback, reinventing itself as a services giant. Or perhaps Apple, Facebook, Uber. Maybe Alibaba or Tencent. There are perfectly compelling cases to be made for all of them. But the winner? It has to be Netflix. Let's see a clip of it in action.
The shares soar
But it is not just about the share price. It is about influence: Netflix has been the most disruptive firm this decade. It has turned not just one but two of the world's biggest industries upside down. Broadcasting has been transformed. Traditional terrestrial and pay-TV have both been left looking quaintly old-fashioned compared with the streaming giant and its conveyor-belt of high-quality, big budget TV shows. With a spend of more than $10bn a year on new productions, it has mastered the art of creating programming that people talk about. With the possible exception of HBO, no other company comes close. Even the film studios look lame by comparison. It has forced Disney, HBO and, in this country the BBC and ITV, into launching rival services.
but will profits ever roll in?
But Netflix's influence goes beyond that. With subscriptions and streaming it has created a whole new business model. Sure, people have always subscribed to things, such as newspapers and magazines, gyms or maybe a wine package. Netflix took it to a whole new level. It showed that customers are more than happy to pay a small monthly fee for unlimited access to a product they want. That model is starting to spread. We now get music from Spotify, razors from Harry's, books from the Kindle store. Pretty soon, instead of buying a car, we might just pay a monthly fee to use a ride-sharing app.
Netflix made it clear that streaming services is often a more powerful offering than selling things. And its mastery of the algorithms, data management and customer service needed to make that work smoothly means it may well turn into the most powerful player in the sharing/streaming economy. To take just one example, if the world moves to shared, driverless cars, then Netflix may have a lot more relevant expertise than either Ford or Toyota: building the cars won't be especially difficult, but getting the right one to your door on time will be.
True, Netflix still doesn't make any money. It has become brilliantly successful at taking lots of cash from Wall Street and giving it to TV producers, actors and writers. Whether it can do that profitably remains to be seen. Even so, there is no question its impact has been huge. It was the most influential company of the decade as well as the most rewarding for investors.