2015 has been a busy year for the new gTLD industry and 2016 will undoubtedly, be another interesting year. Anticipation of the General Availability for some of the highly contentious TLDs, the development of existing generic Top Level Domains (gTLDs) in terms of registrations, and business proposition with the majority of the first round of applicants reaching delegation by the end of the year.
While 2015 had over 7 million new gTLD domain registrations, the top 25 Top Level Domains accounted for almost a half of both registration revenues and volumes highlighting the need for the industry to garner further momentum and fortune. The 2015, Q4 performance overview will provide an understanding of the industry's progress by explaining which gTLDs were analyzed, insight into how each of the tiers is performing and conclude with the health of the industry.
Before diving into the details, it is important to understand which gTLDs were included in the analysis. gTLDs that have been in General Availability for at least 60 days (to eliminate initial registration upswings), are open TLDs, not exclusive-use brands, and if the gTLD has offered free or significantly low registration pricing it must have had a renewal period. While a low price, high volume model has its merits, sufficient renewal data and basis for comparison is required to form meaningful outcomes. Registry revenues do not include premium name sales as consistent, reliable data is not available. Average retail prices were based on four registrars and in the cases where the gTLD was unavailable at all four, alternative registrars were relied upon.
December ended with 853 delegated new gTLDs, a significant increase over the 476 at January 1st. The average daily volume of new gTLDs in Q4 increased from Q3 with 39 domain registrations per day, up from 33 in Q3, with an average retail price of $59.70. Separating the gTLDs into four quartiles or 'tiers' has been utilized to gain greater insight with tier 1 being the top 25% and tier 4 being the bottom 25%. The dataset grew by 44 gTLDs over the quarter which is described below along with each tier's unique characteristics and related growth patterns.
Tier 1: gTLDs include .loan, .bank, .law with an average volume of 147 registrations per day and an average retail price of $91.27 for a projected yearly revenue of $1.5m which is a significant increase from Q3 with the average revenue of $964k. .xyz has been included in this quarter as the low price promotion had exceeded a renewal period but even with the exclusion of .xyz, the average registration volume was 120 registrations per day with a yearly revenue of $1.43m.
Similar to Q3, price is not propelling registration volumes in Tier 1, the gTLD is. This reoccurring theme is consistent through the analysis and highlights the notion that registrants will pay for a meaningful, relevant gTLD over a reduced price. Unlike any other tiers, the performance of Tier 1 has consistently grown throughout all four quarters of 2015 in average and median revenues along with registrations volumes. Tier 1 continues to blaze forward with the gap between tier 1 and tier 2 growing. Thus, postulating that Tier 1 gTLDs are understood by registrants and/or promotions enhance recognition resulting in increased registrations regardless of the increased price over other TLDs in other tiers.
Tier 2: .diet, .city, .fit, .wiki are in the second tier of gTLDs. Tier 2 has an average retail price of $51.03 (up from $45.45 in Q3) and a median price that has declined to $29.99 ($35.24 in Q3) along with a significant decrease over Tier 1 with an average volume of 23 daily registrations. This volume remains unchanged from Q3 resulting in a yearly revenue of $250k (down from $287k in Q3). Tier 2 has a moderate price volume correlation and has increased in average value from $39 to $45 to $51 in Q2, Q3 and Q4 respectively. However the projected yearly registration volume has consistently declined throughout 2015 with a volume of 10k in Q1 to 8.3k in Q4. The gap between Tier 1 and Tier 2 continues to grow with Tier 1 being six times larger than the volume and revenue in Tier 2. gTLDs that are have singular and plural versions are more likely to be in Tier 2 and similar TLDs with a lower retail price are more likely to have a higher volume than their more expensive counterparts i.e. .gift/.gifts, .review/.reviews.
Tier 3: .works, .gift, .men, .hockey are a few of gTLDs in the third quartile with an average daily registration volume of 9, down from 13 in Q3, and an average retail registration price decline of almost 30% ($64.88 in Q4 and $83.82 in Q3). Thus, it is no surprise that the average projected yearly revenue has also declined to $113k (down from $145k in Q3). Tier 3 registration volume in Q3 had the largest decline from a projected yearly volume of 4.8k in Q3 to 3.2k in Q4. The combination of revenue and volume decreases has increased the gap between tier 2 and tier 3. Of the 14 gTLDs moving from Tier 4 to Tier 3 over the last quarter it was not due to a price decreases as the majority of these gTLDs had a higher average price than those in Tier 4.
Tier 4: The final tier consists of TLDs such as .horse, .bingo, .lease and .gives. The decrease on the average registration volume over Q3 combined with the decline in price results in an average yearly revenue of $42k ($58k in Q3) and the biggest decline in the median yearly revenue of 34% ($43k in Q4 and $65k in Q3). Tier 4 has the lowest average retail registration price of all the tiers at $31.62 ($35.16 in Q3) and an average daily registration volume of five (down from seven in Q3) for Tier 4. This tier is distinctive as it contains clusters of political and military TLDs such as .democrat, .republican and .army, .navy and .airforce and almost half of all IDNs in General Availability highlighting the struggle IDNs are facing for acceptance.
While most tiers are improving, it's imperative to keep the bigger picture in focus. Currently, 75% of gTLDs are projected to be operating in 2016 with the average revenue per gTLD at $483k with an average of 16,700 yearly registrations. 2015 reflects growth but also emphasizes the consistent need to increase consumer awareness to improve registration volumes and revenues and in turn, the health of the industry. So while the industry has definitely moved in the right direction in 2015, success in 2016 will require further improvements.
The full analysis along with additional information can be found at http://dottba.com.
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