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New Top Level Domain Industry First Half 2016 Analysis & Insights (Infographic)

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Christa Taylor

This post provides an overview from The First Half of 2016 infographic, reflecting on some of the intriguing highlights of the new gTLD industry.

The data analyzed within the infographic is based on the following:

– Revenues are based on the average retail price over four registrars (101domain, eNom, GoDaddy and United Domains) at the end of June 2016.

– Top three TLDs launched in 2016 are based on TLDs entering into General Availability after January 1st and based on volumes and not revenues

– For greater insight, the TLDs have been separated into four quartiles or 'tiers' with tier 1 being the top 25% and tier 4 being the bottom 25%

– The top ten based on projected yearly revenues based on daily registration volumes

– New Top Level Domains (TLDs) contained in the data set reflect open TLDs and exclude single registrants such as brands

– Initial registration upswings have been eliminated with TLDs in the data set to be in General Availability for at least 60 days

– Free or significantly low registration pricing must have had a renewal period otherwise, it has been excluded from the analysis as sufficient renewal data to form meaningful outcomes is not yet available

– Registry revenues do not include premium name sales as dependable revenues are not available

– Operational losses are based on TLD revenues with a conservative $150k in expenses

* * *

2016 Half Year New gTLD Review (Click to Enlarge)

Top Level Domain Statistics and Business Implications First Half 2016 Overview

  • Average prices were based on prices at the end of September retrieved from 101domain, eNom, GoDaddy and United Domains. If a TLD was not found on any of these sources websites, an alternative source was used
  • The dataset contains 426 TLDs in general availability for at least 60 days and have had a full renewal period if they had a low-cost/free registration period
  • Average number of registrations per day is 61.3
  • Top 25 TLDs account for almost half of revenues and two-thirds of registration volumes
  • Less than 12% of TLDs will exceed ICANN's minimum yearly fee
  • Largest group of TLDs are in the $20 to $25 retail price range
  • Average revenue of all gTLDs within the dataset is $405k (down 16% from Dec 2015)
  • Average retail prices ($31.24 to $123.19) within each tier differ yet the median price difference is minimal ($29.49 to $33.74)
  • All Tiers have a weak or very week correlation between price and volume
  • Based on today's data, 53% of TLDs are projected to operate at a loss for the next year with a conservative expenses of $150k

Insights from gTLD Statistics and Business Implications First Half 2016

Tier 1: Trailblazers – A strong pack of leading TLDs who continue to grow the gap over the other three tiers

  • Still remains true, registrants will choose and pay for a meaningful, relevant TLD which reflects the higher than average retail prices in Tier 1
  • Reduction in prices is not being offset with an increase in volume
  • Projected yearly volume has increased quarter-over-quarter
  • Average revenues for the first time have declined by over $250k (~16.5%) when compared to Dec 2015
  • Median revenues have also declined by $125k (15%) over Dec 2015
  • The large volume and higher prices of TLDs in Tier 1 help ensure their financial success
  • Surmise: Strong TLDs are understood by registrants and/or have promoted the TLD so registrants recognize it. This tier will continue to grow and will receive the biggest (and most deserved) benefits from industry growth
  • Tier 1 TLDs are shorter in length than any other tier with an average of 5.35 letters
  • Tier 1 TLDs include: .loan, .sucks, .auto, .design, .global, .company, .photo, .rocks

Tier 2: Path Finders – Finding their way

  • Average and median revenues in Tier 2 have declined by 19% and 20% respectively with the average revenue of just over $200k
  • Average retail price is $75.21 and a median of $29.49
  • The price-volume correlation is no longer a consideration in any Tier
  • In every case of singular versus plural TLDs, the singular TLD ranks higher and in 80% of the cases is in a higher tier i.e. .photo and .rent is in tier 1, .photos and .rentals are in tier 2
  • As a group, the length of the TLD in average number of characters is 6.11
  • Similar TLDs are more likely to be in tier 2 with over 2/3 having a higher volume at a lower retail price i.e. .accountant/.accountants, .gift/.gifts, .market/.markets
  • 66% of similar TLDs with a shorter length will have a higher registration volume i.e. .gift/.gifts, .review/.reviews, .market/.markets
  • Average volume is down 16.5% over Dec 31th to a projected yearly volume of 7,000 registrations
  • Tier 2 TLDs include: .taxi, .tours, .school, .social, .money, .brussels, .gallery, .loans, .style

Tier 3: Campers – Niche groups of TLDs

  • Niche TLD Registries like .pizza, .vet, .rich, etc. appear to have projected the lower volume and have offset it with a higher price
  • Average retail price in T3 is $72.35 and a median price of $33.74
  • Registration volumes have decreased by 24% resulting in a decline in average revenues of 21.5% and a median of 22.2% over Dec 2015
  • Average TLD length is up to 6.35 characters in length
  • With an average retail revenues of $89k TLDs in this Tier should be calculating the financial impacts on their business and analyzing their strategic plan forward
  • Tier 3 TLDs include: .pharmacy, .build, .fans, .tax, .green, .degree, .parts, .limited, .toys, .graphics, .capetown, .camera

Tier 4: Hikers – Determining a pathway up!

  • Lowest average retail price of $35.69 (up from $31.62 in Dec 2015) and a median price of $29.74 (also up from $28.74 in Dec 2015)
  • Total average/median revenues are down from Dec 2015 by 25% and 23% respectively with average retail revenues of $32k
  • Projected volume has declined by a significant 38% over Dec 2015 to an average of 1,150
  • With low total projected retail revenues, most if not all TLDs in Tier 4 are operating at a loss
  • Similar to Dec 2015, 48% of IDNs are in Tier 4 (26% in Tier 1, 22% in Tier 2 and 4% in Tier 3)
  • Tier 4 TLDs include: .fish, .reisen, .glass, .villas, .fail, .town, .rip, .bargins, .futbol, .memorial, .organic, .work

gTLD Business Implications for first half of 2016 and the road ahead

  • Average registration volumes have increased to 22,360 an average increase of 5,650 Dec 2015
  • Average and median retail revenues have declined on average by 16.9% and 16.4% over Dec 2015 to $404k and $144k respectively
  • Tier 1 Trailblazers continue to increase the gap from Tier 2 in revenues and registration volumes
  • Average retail prices have increased by $17.20 over Dec 2015 with no change in the median price
  • Increased premium name sales will help improve the financial performance of the TLDs which has not been taken into consideration in the financial projections contained within
  • Over 50% of TLDs will be operating at a loss for the next year with the current volumes & prices

Please do not hesitate to contact us for any questions, insight or items to consider for future analysis.

By Christa Taylor, Christa Taylor is the CEO of DotTBA. More blog posts from Christa Taylor can also be read here.

Related topics: Domain Names, Top-Level Domains

 
   

Comments

Revenue Analysis Appears Deeply Flawed George Kirikos  –  Jul 12, 2016 6:22 AM PDT

The infographic suggests that .loan had the highest revenue in the period, but I'm not sure that's correct. If you look at nTLDstats for that registry, the top 5 registrars are from China, and it's highly likely those domains were sold at very low prices.

Instead, you used the "average retail price over four registrars (101domain, eNom, GoDaddy and United Domains) at the end of June 2016", which is going to be way off, given those registrars account for a tiny percentage of the domains that were actually sold by that registry. GoDaddy only sold 370 of the 248,656 registered domains in that TLD (at the time of this post).

George, thank you for your input. Christa Taylor  –  Jul 12, 2016 10:22 AM PDT

George, thank you for your input. As you probably know, often there is minimal visibility on special promotions and rebates unless one is a Registrar, but your detailed observation is likely correct. Given limited transparency and access to all forms of data, the infographic is less than perfect but that is not its intent. The goal of this infographic, both prior and current forms, is to set a marker (the proverbial stick in the sand) and consistently and methodically measure from it only eliminating TLDs that produce out-of-band characteristics that will grossly skew results.

A message for all, I welcome as much data as people and companies are willing to send. I will gladly seek ways to integrate data to enhance accuracy. I will add at least one Chinese registrar on the next analysis to determine the impact on revenues along with a comparison to prior periods.

Lastly, I'd like to point out that much of the data presented here is based on forward projections and not just solely based on actual data. We are working with other partners on a plan to complement this projected data with actuals. Stay tuned and of course all feedback is welcomed and appreciated!

You're welcome, Christa. One source of data George Kirikos  –  Jul 12, 2016 10:59 AM PDT

You're welcome, Christa. One source of data might be the public financial statements of Rightside and Minds+Machines. And, to a lesser degree, those of other public companies like CentralNic, Neustar, GoDaddy, Tucows, Web.com and Endurance (although, obviously not as good, since they're not pure new gTLD registries, but sometimes they'll break down some revenues, allowing one to glean bits of knowledge, sometimes from the footnotes).

Until Donuts goes public, the industry data will likely remain very poor, so one would have to put in quite a bit of work to make decent inferences from whatever is actually available. Kudos for trying!

Thank you and an invitation Samantha Frida  –  Jul 12, 2016 11:27 AM PDT

HI Christa,

Thank you for publishing this - its always nice to see different perspectives and analysis on the nTLD industry and everyone will have a comment or two about it. The fact you published this, is an opportunity to view another perspective on the current landscape of the nTLD space.

I would like to invite you to view the analysis done by Dataprovider.com on more than 900+ nTLD's analyzed with as much insights reported into each zone. We are currently providing nTLD Registries with access to the system to gain monthly reports on their TLD's to hopefully help impact renewals positively. It is very interesting to see how many of these Registries take interest.

It would also be interesting to see how many business have adopted the nTLD's as part of their business identity. Very soon, I believe we will have insights into that as we index Company names for websites analyzed from these nTLD zones.

In any case, feel free to message me at sam@dataprovider.com for that walk through.

Thank you again for this post.

Businesses That Are Adopting ... Max Menius  –  Jul 12, 2016 7:51 PM PDT

@Samantha - "It would also be interesting to see how many business have adopted the nTLD's as part of their business identity."

Samantha, here a few tools that allow internet users to follow new TLD evolution/adoption. My favorite is the Google tld-specific listing of websites. Simply type the phrase below in the Google search field to see nTLD websites coming online:

site:.newTLD (and replace "newTLD" with .energy or .club or .condos or whichever ntld interests you)

Also, you might visit Registered.today to view which new TLD's are registered daily. This is quite eye-opening.

Buy In or Get Out Phil Buckingham  –  Jul 13, 2016 8:29 AM PDT

Hi Christa,
I, for one, can appreciate the incredible amount work that has gone into this. Many thanks for publicly posting this - as we all try and figure out what is ACTUALLY happening in the gTLD marketplace and what to do next.
There a number of drivers and your detailed analysis here of the sales/ volume /price registration data is a key one & is revealing, reflecting our own findings. Especially Tier 4 : the vast majority ( and increasingly so ) do not have a viable business model, running , run out of cash , wont get to critical mass . We are increasingly being approached to find further investment or asked how much the TLD is worth ,if sold,and who is buying in. It is going to be a long hike uphill for most and some now regretting their decision @ 2012 . P

Registration volumes Jean Guillon  –  Jul 20, 2016 4:04 AM PDT

Hello Christa and thank you for this post. We actually posted its link on gTLD.club and its Newsletter.

If this can be of interest to you, we track and list weekly new gTLD registration volumes according to sectors and businesses. Our reports are available here: http://www.jovenet.consulting/reports

Congratulations for this great post.

Hello Jean,I would have saved myself some Christa Taylor  –  Jul 20, 2016 11:55 AM PDT

Hello Jean,

I would have saved myself some time if I used your singular vs. plural page and also like how you have grouped TLDs within the various classes. 

Thank-you for the comment and for sharing the post!

With more time... Jean Guillon  –  Jul 20, 2016 12:05 PM PDT

...I would provide more reports.

The good thing is that numbers are written week by week so it is a good method to check which kind of TLD works and which does not.

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