New gTLD market evolution

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Assessing new gTLD competition by using Monte Carlo Simulation

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New gTLD market evolution

  1. 1. New gTLD Market Evolution Simulations for gTLD Market Competition Kenny Huang, Ph.D. Executive Council, APNIC Board Director, TWNIC New gTLD Review Group huangksh@gmail.com
  2. 2. Value of gTLD High ROITop search engine rankings of the domain nameThereby to a high number of visitorsCount as significant traffic 2
  3. 3. Concentration RatioCR4 : Four-Firm Concentration Ratio measures the total marketshare of the four largest firms in an industry CR4 Concentration Ratio Market Competition CR4=0 % Perfect competition CR4=100% Monopoly 80% < CR4 < 100% From oligopoly to monopoly 50% < CR4 < 80% Oligopoly 0% < CR4 < 50% From perfect competition to oligopoly 3
  4. 4. Legitimate gTLD CR4 com/net/org/info 99.00% eu mobi asia tel 98.50% 98.34% 98.37% 98.39% 98.21% 98.01% 98.09% 97.99% 98.00%Concentration Ratio 97.50% Infringe NTIA agreement & ICANN Core Value “promote and sustain a competitive environment” 97.00% 96.50% 96.00% 95.50% 95.00% 2007 2008 2009 2010 2011 2012 2013 CR4 : Four-Firm Concentration Ratio measures the total market share of the four largest firms in an industry 4
  5. 5. ICANN New gTLD Updated applications 1930 34% Brand IDN gTLD names 1409 53% Community Geographic Generic 6% applicants 1155 3% 4%How does competition affect the market? given that 1409 gTLDs successfully delegatedDesign Assumption:Total gTLD domains : 140,667,491 (2013 Jan)Previous gTLD penetration : 250K – 750K DUM (Domain Under Management) in the 1st yearNew gTLD names : 1409New gTLD DUM : designed by probability distribution 5
  6. 6. Back-End Suppliers400 358350 333 305300250 236200 161150 101 95100 86 60 5850 27 27 23 23 21 16 0 CR4=63.83% 6
  7. 7. Perceived New gTLD Evolution Legitimate gTLDDUM Post New gTLD ƒ (DUM) 7
  8. 8. Monte Carlo Simulation A: New gTLD Market Penetration Scenario 20% High Penetration : 250K-750K DUM/gTLD50% < CR4 < 65% 80% Low Penetration : 5K-250K DUM/gTLD 8
  9. 9. Monte Carlo Simulation B: New gTLD Market Penetration Scenario 10% High Penetration : 250K-750K DUM/gTLD57% < CR4 < 78% 90% Low Penetration : 5K-250K DUM/gTLD 9
  10. 10. Monte Carlo Simulation C: New gTLD Market Penetration Scenario 20% High Penetration : 100K-250K DUM/gTLD67% < CR4 < 81% 80% Low Penetration : 5K-100K DUM/gTLD 10
  11. 11. Monte Carlo Simulation D: New gTLD Market Penetration Scenario 10% High Penetration : 100K-250K DUM/gTLD79% < CR4 < 89% 90% Low Penetration : 5K-100K DUM/gTLD 11
  12. 12. Implications• Market competition – gTLD market will likely be oligopoly competition after new gTLDs enter the market• Name space expansion – Magnitude of growth of total name space proven not to exist – Name space maintains incremental growth pace.• Registry business – Majority of new gTLD registries will inevitably deal with cash flow shortfalls. – Exit plans may be exercised ahead of time for some registries.• Large back-end suppliers are major beneficiaries from the new gTLD policy 12

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