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The new Top Level Domains are shaking the main established registrars
Four of the first registrars in the world are not part of the nTLD « Top 10 ». More agile challengers are taking advantage of this situation. Overview.
Initiated in January 2014, the commercial launch of the New Top-Level Domains (nTLD) has been greeted with mitigated warmth by market players. This study focuses on the top 10 registrars worldwide to assess how they are positioned with respect to the new TLDs. By contrast, it seemed interesting to note some of the factors that have allowed four "challengers" to move up into the "Top 10" on new TLDs.
Our data are based on ICANN reports as at 30/04/14 and Ntldstats.com statistics as at 31/08/14.
The indicator on which our assessment is based is calculated by taking the ratio between the market share of a registrar on the new TLDs and its market share in generic TLDs (.com, .net .org, etc.,) created before 2013.
In this way:
- a registrar whose market share in the "traditional" gTLDs is 5%, while its market share in nTLDs is 10%, has a ratio equal to 2;
- Conversely, a registrar whose market share in the "traditional" gTLDs is 10%, while its market share in nTLDs is 5%, has a ratio equal to 0.5.
A ratio greater than 1 means that the registrar’s market share is higher in nTLDs than in traditional gTLDs. The ratio therefore reflects the level of the registrar’s commitment to the new TLDs, either by the means employed (sales drives, promotional campaigns, etc.) or by the success with its resellers and customers in the TLDs it has chosen to market. Here we measure both the level of commitment and of success, which for simplicity’s sake we shall refer to as "positioning".
The study identifies four categories:
- Ratio less than 0.5: weak positioning
- Ratio between 0.5 and 1: moderate positioning, with no emphasis on nTLDs
- Ratio between 1 and 2: moderate positioning, with an emphasis on nTLDs
- Ratio higher than 2: strong positioning
Five of the top ten registrars worldwide are in category #1:
Note that the nTLD occupying the first place in their portfolio does not exceed 20%, except for the .kiwi at MelbourneIT (41%), which implies that the registrar is fairly weakly positioned on the other nTLDs. Tucows is the third largest registrar worldwide and 10th in the "Top 10" of nTLD registrars. It is the only registrars in this category to belong to the two "Top 10s".
Two of the top ten registrars worldwide are in category #2:
Surprisingly, because it is the leader on a fairly large number of nTLDs, GoDaddy is in this category. The explanation is that the registrar is well positioned on a large number of "small and medium" TLDs, which is reflected in 12% of the .guru, but not on some nTLDs that have achieved very high volumes.
Note that these two registrars are also part of the "Top 10" in terms of nTLDs. Their market power is such that their relatively moderate performance on the nTLDs does not prevent them from obtaining first place in terms of market share. This infers that these registrars have not yet tapped their full potential in the nTLD segment.
Two of the top ten registrars worldwide are in category #3:
Not surprisingly in view of the explanation given for GoDaddy, this concerns registrars positioned on two of the nTLDs that have been subject to large-scale sales drives leading to a large number of registrations – for a fee or for free. However the difference in "weight" between the two nTLDs in terms of portfolio (18% for 1&1 and 63% for GMO) suggests that the former has invested in a greater number of nTLDs resulting in sales volume, while the latter markets TLDs that for time being are "crushed" by the volume of the .xyz.
Only one of the top ten registrars worldwide is in category #4:
The good ratio of Network Solutions is almost entirely due to the .xyz that the registrar has marketed in a particularly aggressive way. The four other registrars are worth watching because they are the "challengers", those who are in the Top 10 registrars in terms of volumes of nTLDs registered, without being in the top 10 worldwide. They are the ones who benefit most from the nTLDs to gain new market share, even if in the case of Uniregistrar there may "proprietary" registrations in the TLDs held by Uniregistry (as in the case of the .link).
The scalability of the ratios between the real figures for April and the estimates for August reflect the fluidity of the nTLD market, it being possible for the positions acquired at a given point în time to be undermined at any other time by the arrival of a high-volume, new TLD or aggressive sales drives.
As a result, the decision by a registrar to position itself on a given nTLD may condition to a relatively decisive degree its acquisition of additional market share. This being said, the financial terms of the gains in market share are sometimes extreme (free or systematic "distribution" of nTLDs to customers who have not requested them). Today’s dazzling ratios therefore remain highly scalable, the portfolios they form being much more exposed to non-renewals than smaller portfolios, but for which holders have paid to obtain their domain names.
Sheer volume is not enough to account for success in the medium to long term, and "positioning" ratios of this kind, while they quantify a situation at a time T, does not enable forecasts about the future performance of the various stakeholders. Their performance depends on their ability to keep holders and convince them to actually use the names they have registered, a problem common to registers and registrars alike.
The "positioning" ratio, therefore, merely reflects a level of performance against a given potential. This level does not necessarily correspond to the ambitions of the registrars when they chose to propose a given nTLD to their customers. A large number of factors may be involved, such as insufficient promotional campaigns on the site of the registrar, a lack of enthusiasm among resellers, or simply a customer base that is unresponsive to nTLDs because they are insufficiently aware of their arrival on the market. None of these factors being insurmountable, registrars with moderate results today have every chance of improving their positioning if they give themselves the means.
A bias in the ratio, which can be verified for GoDaddy, is that it considers the overall situation, regardless of the rank of the registrars in each TLD market. Perhaps it is better to be the leader on a few high-potential TLDs than to be in "pole position" on a TLD artificially inflated by short-term promotional tactics.
Over and above these methodological considerations, one certain conclusion is that the cards are being reshuffled between the stakeholders. "Challengers" are arriving thanks to nTLDs, while some incumbents seem slower in taking advantage of these new, still-emerging markets with their 2 million registered domain names compared with a world total of 276 million (data provided by Verisign). A broader study, covering all the ICANN registrars, would probably confirm this phenomenon, which will be interesting to follow over time.
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