RBC Report On New gTLD’s “Could Be A Game-Changer For The Domain Registry & Registrar Businesses”

The Royal Bank of Canada (RBC)  published a fascinating report (pdf) today on the gTLD business.

The report is entitled: “Say .anything – Opening Up the gTLD Landscape” and subtitled: “Examining the potential value the new gTLD initiative creates for Demand Media, Inc. (DMD) and Web.com (WWWW)”

Its a 17 page report which you of course should check out in its entirety since it is a very interesting look into the business of domain name registrar and registries and offers some huge estimates of the valuation of these new registries.

Of course we can debate the numbers and some of the facts stated in the report but it should be an eye opener for many in the space.

Here are some of the highlights and we will have comments after:

“The new gTLD initiative could be a game-changer for the domain registry and registrar businesses. ”

“With potentially 100s more gTLDs becoming available for use in the next year or so, we think DMD and WWWW – two companies in our coverage universe with major domain registrar operations – will be longer-term beneficiaries through the expansion of the domain name-space.”

“We estimate a registry that reaches 10mm domains in 7 years (with moderate growth thereafter) could be worth ~$260mm. ”

“We estimate a registry with 5mm domains (reaching that level by year 6) could be worth roughly $140mm and a registry with 15mm domains (reaching that level by year 10) could be worth roughly $340mm.”

“We have a favorable view of the domain registry business given its high-margin and stable/growing cash flow characteristics. ”

“We do note that assessing the potential size of a gTLD is more art than science.”

So here is what we know.

There are 250 million domains including ccTLD’s.

We know there is around 120 Million .com and .net domains.

There are over 1 Million .Mobi’s

There are over 8 Million .info domain names.

There are over 2.2 million .Biz domain names.

So when they are talking about a registry doing 15 Million, 10 Million or 5M annual registrations they are not talking per string but per registry and some registries appear that may wind up with 10, 50 even mover 100 strings.

When you consider someone who spent say $10M in application fees on 50 extensions, well you can see what the end game is.

A $10 Million investment into a business worth $140M-$340M in 10 years.

Of course there are other costs associated with running a string including the cost of obtaining a contested string and the  marketing costs but the rewards are tremendous.

One thing clearly missing from the report is the increase cost in marketing that new gTLD’s will have in comparison to Verisign which is the registry whose numbers they are using to  compare future registry operators to




  1. says

    Not sure how much research was put into this analysis as it has no mention of the Non Latin aspect of the new gTLD process and if it is a game changer to registries i would think it would include Verisign, Afilias and PIR.

  2. Michael H. Berkens says

    Keep in mind that the report was written as coverage for two stocks RBC covers Demand and Web.com and is not to cover every company in the space.

  3. says

    “The new gTLD initiative could be a game-changer for the domain registry and registrar businesses”

    How long do you think Vinton Cerf and Steve Crocker will be able to keep the ICANN DELAY & DERAIL filters in place ? – especially for .WEB ?

  4. says

    where is the market for all these new TLDs in a world that is going to Apps?

    comScore: In U.S. Mobile Market, Samsung, Android Top The Charts; Apps Overtake Web Browsing


  5. Michael H. Berkens says

    Well as of the last quarterly Verisign state of the domain report, domain name registrations continue to grow.

    There are 6 billion people in the world I think only 2 billion are online

    There are only 250 million domains registered

  6. says

    “where is the market for all these new TLDs”

    Clearly 1,000,000 .WEB names will not result in a displacement of 1,000,000 .COM domains, but it could be close.

    In the interim (transitions), there will likely be a very short-term need for MORE .COM domains as scaffolding***. That is primarily to break the grid-lock of the ISOC/IETF Eco.System which does not want their Cash Cows threatened.

    *** Serious future .WEB owners are advised to buy the NAME_WEB.com (or something similar :-) Hint _- )
    Then, secure your web domain with the TWO major platforms now ramping up.
    Once you do that you will likely be contacted to help build the Peer-2-Peer .WEB Platform. You can join the .WEB Pioneers and visit the .WEB 3D World :-)

  7. Michael H. Berkens says

    A gain of 10M domains does not have to be at the loss of 10M .com’s

    There has been continued growth in the entire domain space but the numbers need further crunching

  8. says

    “A gain of 10M domains does not have to be at the loss of 10M .com’s”

    AGREE 100% :-)

    But – Things are going to get very complex as people start to call things like TwitterNames “domains”.

    We could also see THREE categories of “domains”
    Peer-2-Peer P2P (also called ExtraCrispy :-) )

    .WEB Pioneers should BEWARE – The I* Eco.System has their own plans for keeping the .WEB Registry Revenues to fund the W3C as one activity.
    The DELAYandDERAIL masters are clever and will likely try to make .WEB evolve from THIN to THICK and eventually P2P [They of course will never support P2P – they lose control] – You can expect them to throw .WEB into the “contention” category to delay it and derail it. Going direct to P2P will derail them.

  9. says

    “A wise man once told me in confusion and uncertainty there is great opportunity”
    :-) :-) :-)

    An early Internet Lawyer once said: “When two groups disagree – there is money to be made”

    .WEB will be historic – but it could be derailed – The Delay_and_Derail Masters have stone-walled for over 12 years

  10. says

    Thought proving article.
    ” we conservatively assume first year operating margins of 25%, improving to 45% over time”
    Absolutely no way ! Millions of dollars of marketing money will have to be thrown at this with negligable impact on the top line, IMO.

    Many registrars will be squuezed out due to the new vertically integrated model.

  11. says

    “Many registrars will be squuezed out due to the new vertically integrated model.”

    Yes, the so-called THICK Registry will move .COM and the other gTLDs BACK to the PRE-ICANN arrangement.

    There is no need to accredit Registrars – any person or company can be customer of the Registry

    The Peer-2-Peer .COM Registry follows (falls out) from the THICK arrangement

  12. says

    BTW – Now that the U.S. Government will be running ICANN (IANA) again – large domainers may want to contact NTIA to get the $6 price level restored.

    It was the U.S. Department of Commerce that set the $6 .COM Registry fee, NOT ICANN. ICANN took credit for the lower fees.

    NTIA also runs the .US top-level-domain without ICANN

  13. says

    Hello MHB

    I know quite a bit about Web.com. I own no positions in the company and have recomended it to private Hedge Funds. They have their hand on the pulse of satisfying and servicing their customers. Savvy ,Young, Bright Management ,whatever they touch look into it ! they are on the Ball.

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

  14. says

    All of these estimates are completely overblown. Advertising costs will be big upfront and we have to assume that well over half of all new extensions, if not more, are going to be busts within the first year. To even launch an extension that breaks the 1 million barrier is going to be a big deal long term. Way too much supply and not enough demand. Just because you own .lol doesn’t mean every person and company is going to buy one.

    Look at .XXX, one of the best extension launches since .co (not sure which has sold more). Most of the .XXX sales have been companies protecting their brands, nothing more, nothing less. .Co was all speculative as “the next .com” and that was a complete bust as well (they still sold a ton of domains but I guarantee you renewals are going to be extremely low).

    In the end these GTLDs are created to generate cashflow for their owners, not because the market is in extreme short supply and high demand for more new domains. Every new GTLD that comes out there is less and less hype, and this is only going to fast forward the process. Just like startups, every so often there is a homerun or a success for investors, and the same will be true here.

  15. says

    excellent analysis but dont miss the conclusions: Yes, “…the percentage of growth will have to increase substantially from current numbers for a substantial number of new gTLD operators to make their money back and a profit.”

    and Yes “”Anyway you look at it the total number of registered domain names and the percentage of growth will have to increase substantially from current numbers for a substantial number of new gTLD operators to make their money back and a profit.””


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