Registrar Trend Lines in 2015

An upswing in concentration against a slowdown in sales momentum

As the key partners for registries, registrars have seen their environment radically change since January 2014. The influx of new TLDs has sometimes forced them to make difficult choices. Which of the market "newcomers" should they opt for? And to what extent should they continue to offer their customers traditional TLDs, whether they are ccTLDs or Legacy TLDs, which have the merit of being known and sought after by users?

And what changes have customers made, because their budgets are not infinitely expandable, and so have had to arbitrate between "defensive" TLDs, "strategic" TLDs used to communicate, and the "opportunity" TLDs that have been available in bulk for several months?

Against a market background in which supply and demand evolve in parallel but not necessarily symmetrically, adjustments are inevitable and may be partially reflected in the trend lines for .fr TLD registrars.


An upswing in the concentration trend


If we examine the concentration levels for the HHI (Herfindahl-Hirschman Index) (Fig. 1), it can be seen that the index increased sharply between 2010 and the end of 2013 before levelling off in a fairly marked manner in 2014, and resuming its upward trend from 2015 onwards. The blatant contrast in 2014, the year of the introduction of the first nTLDs, is necessarily linked to this phenomenon. It is more difficult to explain, however: one might suppose that since the "leaders" usually absorb most of the demand they were less interested in the .fr TLD in 2014 because their focus was on the integration and launch of the new TLDs. Since this is a well-established process and demand is not always up to expectations, the "leaders" in 2015 presumably resumed their old practices and promoted the .fr TLD more than they did in 2014.

If it proves valid, this analysis would naturally be of concern for the nTLDs which, in a high-growth period, vitally need to be "pushed" by registrars.


Fig. 1 - Source: Afnic.

Herfindahl-Hirschman Index calculated by making the sum of the squares of the market shares of the top 10 registrars.


Growth Ratio: an increasing number of ailing registrars


Study of the Growth Ratios identifies registrars taking or losing market share. Note that the stability in 2014 compared with that for 2013 is consistent with that of the Herfindahl-Hirschman Index. However, in 2015, the overall trend since 2011 seems to have resumed.


 Fig. 2: Growth Ratios calculated as the ratio between the market share in the cumulative net balance since January 2015, and the market share in stock as at 30/09/2015.


Factors determining market share


Three main factors can be identified and measured to explain the change in market share.


The first is the rate of transfers between registrars. Customer migration from one registrar to another is a zero-sum game as far as the TLDs are concerned, but the impact of their migration is sometimes far from negligible in the performance of a specific registrar. Some even manage the feat of attracting large numbers of registrations through aggressive promotional campaigns, and then losing them to their competitors when the service is not up to scratch.


The second is, precisely, the Create Rate, which measures the proportion in the stock of domain names registered over the last 12 months. A high Create Rate shows that the TLD is commercially very dynamic and in high demand. A lower Create Rate shows that demand tends to be limited and that the TLD is threatened with suffocation. At the registrar level, the Create Rate is important because it shows the impact of any sales drives and, in general, the ability of a market player to capture new customers or "grow" its existing customers by encouraging them to register new domain names.


Fig. 3 below shows, however, that the development of this Rate was unfavorable for most of the players in 2015. In all, 29 of the 38 registrars taken into account here (76%) lost sales momentum, sometimes in an extremely brutal manner. [Two registrars were removed from the analysis, since their extreme values were related to their development models].


Fig. 3: Percentage changes in Create Rates (September 2015 compared with December 2014)



The third factor is the Retention Rate. At the registrar level, it takes into account the domain names (and customers) they have retained. Those who migrate to competitors are lost de facto and lower the Retention Rate. In this case (Fig. 4), the situation is less pronounced than for the Create Rates, "only" 17 players out of 38 (45%) having Retention Rates that deteriorated. The variations are less contrasting, highlighting the greater stability of this Rate.


Fig. 4: Percentage changes in Retention Rates (September 2015 compared with December 2014)


Table 1 below summarizes the distribution of registrars based on the comparative changes in their Create and Retention rates. It can be seen that only 11% of first 38 registrars have seen their performance improve both in terms of attracting new customers and retaining existing customers. Conversely, 32% are declining on both "fronts". In a fairly consistent manner, the rates of 13% and 45% correspond to each other. They reflect the trend of a downturn in the sales momentum of the main registrars for the .fr TLD. This phenomenon is reflected in the aging of the installed base of domain names, and a decline in the proportion of new names. We know, however, that the Renewal Rate increases with the age of the domain names. The table illustrates the trend of the .fr TLD as it enters a "maturity" phase, like most of the other European ccTLDs.


Table 1: Distribution of registrars in relation to variations in their Create and Retention Rates




This brief study provides a certain number of lessons that seem interesting.

First, the upswing in concentrations suggests that the big players are "refocusing" on the .fr TLD in 2015 after the wave of launches of nTLDs, despite the fact that the launches are far from over.

Second, the concentration appears to be related to efforts by some registrars to take customers from their competitors, most of their Create Rates being sluggish. As we have already remarked in a previous Industry report on the domain name market, loyalty among existing customers has become an increasing factor in a market of relatively sluggish demand.

What remains to be seen is whether this sluggishness is the result of "investment" strategies that are less favorable to the .fr TLD than in 2011-2012 or the result of a global decline in demand, or perhaps even a transfer of domain name registrations to the nTLDs. The stability of the .fr TLD market share in 2014-2015 and the degradation in the market share of legacy TLDs in France suggests that the second hypothesis is closer to the mark.












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