The Domain Name Industry Brief
The Domain Name Industry Brief
Volume 5 - Issue 5 - December 2008
The VeriSign Domain Report
As the global registry operator for .com and
.net, VeriSign reviews the state of the domain
name industry through a variety of statistical and
analytical research. As a leading provider of digital
infrastructure for the Internet, VeriSign provides
this briefing to highlight to industry analysts, media,
and businesses important trends in domain name
registration, including key performance indicators,
and growth opportunities.
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+ Executive Summary
There were 174 million domain name registrations across all of the Top Level Domain
Names (TLDs) at the end of the third quarter of 2008. This represents a three percent
growth over the second quarter of 2008 and a 19 percent growth over the same quarter
last year. The base of Country Code Top Level Domain Names (ccTLDs) totaled 68.9
million domain names, a five percent increase quarter over quarter and a 26 percent
increase year over year. In terms of total registrations, .com has the highest base followed
by .cn (China), .de (Germany) and .net. Rounding out the list of the largest TLDs,
.uk and .org had approximately the same number of registrations with less than 10,000
domain name registrations separating them.1
Total Domain Name Registrations
Total Domain Name Registrations
Source: Zooknic, October 2008;
VeriSign, October 2008
+ Industry Growth and Composition
The number of new domain name registrations across all TLDs worldwide in the third
quarter of 2008 was 11.5 million. This represented a decline of new registrations by two
percent from second quarter and two percent from third quarter 2007, driven by declines
in both gTLD and ccTLD growth.
The composition of the domain name industry and rank order in terms of base size
shifted as .cn surpassed .de to become the second largest TLD. The largest TLDs in
terms of base size were .com, .cn, .de, .net, .org, .uk, .info, .nl (The Netherlands), .eu
(European Union), and .biz.
ccTLD Breakdown
At the end of the third quarter, the number of ccTLD domain name registrations
1 The gTLD and ccTLD data cited in this report
grew to 68.9 million. This represents a five percent growth over the second quarter of
are estimates as of the time of this report and
2008 and a 26 percent growth over the same quarter last year. The Chinese ccTLD,
subject to change as more complete data is
received.
.cn, surpassed .de to become the largest ccTLD in terms of the total base of domain
2
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name registrations. Among the top ten largest ccTLDs, there were several changes as
.br (Brazil) climbed up to the eighth position and .au (Australia) joined the top ten for
the first time, displacing .ch (Switzerland). Brazil and Australia continued their growth
trends from the previous quarter driven by changes in their registration policies.2
New Registration Growth
New Registration Growth
Source: Zooknic, October 2008;
VeriSign, October 2008; ICANN
Monthly Reports
TOP CCTLD REGISTRIES
BY DOMAIN NAME BASE,
THIRD QUARTER 2008
1.
.cn
(China)
2.
.de
(Germany)
3.
.uk
(United Kingdom)
4.
.nl
(Netherlands)
5.
.eu
(European Union)
Two of the top 25 ccTLDs grew at double-digit quarterly growth rates including .ru
6.
.ar
(Argentina)
(Russian Federation) and .pl (Poland). Among the top 25 largest ccTLDs, four .eu
7.
.it
(Italy)
(European Union), .kr (South Korea), .es (Spain) and .tv (Tuvalu) experienced larger
8.
.br
(Brazil)
quarterly growth rates than in the second quarter; the remaining ccTLDs experienced
9.
.us
(United States)
growth rates that were flat or slowing compared to their growth rates in the second
10.
.au
(Australia)
quarter. There are more than 240 ccTLD extensions globally but the top ten ccTLDs
contribute 66 percent of the total.
Source: Zooknic, October 2008.
In terms of the total base of domain name registrations, .cn, .de and .uk were the largest
ccTLDs. They all experienced relatively flat growth rates in the third quarter. Year over
year, growth rates were 76 percent for .cn, eight percent for .de and 14 percent for .uk.
Together, the bases of domain name registrations for these three ccTLDs represented 47
percent of all ccTLDs.
ccTLD Breakdown
ccTLD Breakdown
Source: Zooknic, October 2008
2 The .cn Registry (CNNIC) continued to offer
an aggressive price promotion with a 1 RMB
(US$0.13) fee for a one-year .cn domain
name registration. The .au Registry changed
their transfer policy in second quarter 2008
to permit .au domain names to be sold in
the secondary market, thus opening up .au
to a new outlet. In Brazil, the .br registry
liberalized their registration rules in May 2008
to allow consumers, and not just businesses,
to register .com.br domain names.
3
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+ .Com/.Net Dynamics
VeriSign processed peak loads of more than 50 billion Domain Name System (DNS)
queries per day in the third quarter of 2008, resulting in millions of Internet users
accessing Web sites or sending email. The VeriSign DNS continued to maintain
operational accuracy and stability for 100 percent of the time during the third quarter
of 2008, as it has for the past decade. VeriSign’s unique capability to operate global
networks of this nature at this scale and reliability remains unparalleled.
The .Com and .Net Base and New Registrations
At the end of the third quarter, the overall base of .com and .net domain names was
89.4 million domain names. The overall .com and .net domain names adjusted base
increased by two percent quarter over quarter and 16 percent year over year.3
New .com and .net registrations were added at an average of 2.3 million per month in
the third quarter of 2008 for a total of 6.9 million new registrations in the quarter. This
is a nine percent decline over the second quarter and an eight percent decrease over the
same quarter last year. Historically, there has been slowing in the third quarter due to
seasonality. New registrations averaged 7.2 million per quarter in 2007 and are averaging
7.4 million to date in 2008.
VeriSign estimates that the number of .com and .net domain names registered for
traditional purposes represented 92 percent of the base. The percentage of .com
and .net domain names registered with the intent of generating online advertising
revenue is estimated at eight percent of the base.4 The number of new .com and .net
domain names registered with the intent of generating online advertising revenue saw
pronounced weakness again in third quarter due in part to changes in Google’s Ad-Sense
program and lower spending trends in Internet advertising. As some US-based registrars
forecast that economic conditions may contribute to lower than expected growth rates in
the coming quarter, coupled with continued weakness in online advertising, the base of
.com and .net domain names is estimated to increase one to two million domain names
in the fourth quarter.
.Com/.Net Registry
Renewals
Renewal Rates
As a result of the transition currently underway in online advertising, the renewal rate
Source: VeriSign, November 2008
for .com and .net for third quarter rounded up to 72 percent.5 Renewal rates have
historically been in the mid-70 percent range over the last few years. Quarterly renewal
rates may deviate a few percentage points in either direction each quarter based upon the
composition of the expiring base and the contribution of specific registrars.
.Com/.Net Registry Renewal Rates
3 For .com and .net domain name registrations,
VeriSign reports an adjusted base of active
domain name registrations, which reflects
deletions that occur within the five-day Add
Grace Period beyond the quarter end. This
figure may differ from other non-authoritative
publicly available sources which do not adjust
the base.
4 Online advertising-driven domain names
have been registered with the intention of
developing a Web site with PPC advertising
links to generate advertising revenue.
These domain name registrations and their
associated Web sites are typically part of a
larger portfolio of domain names.
5 The registry renewal rate includes ASCII .com
and .net domain names.
4
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Whether a domain name resolves to a Web site is a key factor in the renewal rates
since domain names that resolve to Web sites are more likely to be renewed. VeriSign
estimates that 89 percent of .com and .net domain names resolve to a Web site,
meaning that an end-user visiting that domain name would find a Web site. These Web
sites can be further described as those having multiple pages or as one-page Web sites.
One-page Web sites include under-construction, brochure-ware and parked pages in
addition to online advertising revenue generating parked pages.
.Com/.Net Web Sites
.Com/.Net Web Sites
Source: VeriSign, October 2008
+ Online Video is Coming of Age
With approximately 80 percent of the Internet users in the United States watching
online video at least once per month, online video is quickly becoming a mainstream
activity. The number of online video viewers is expected to grow to 88 percent of
Internet users in the United States or 190 million people by 2012. Online video
watchers are slightly more likely to be women with women representing 55 percent of
online video viewers in the United States. This statistic closely mirrors the gender split
for traditional television. Interestingly, the age of video viewers is very similar to the age
breakdown for overall Internet users as online video has become more of a mass-market
activity from its origins as a youth-oriented activity.6
US Online Video Viewers 2007-2012
(millions and percent of Internet users)
US Online Video Viewers 2007-
2012 (millions and percent of
Internet users)
Source: eMarketer, November 2008
6 All data in this paragraph drawn from “Video
Content: Harnessing a Mass Audience.”
eMarketer, November 2008.
In a recent study among Internet users in the United States who have high speed access
7 “Consumer Online Video and Domain Name
at home, 92 percent stated that they watch videos online at least occasionally.7 More
Study.” Greystones Consulting Group, July
than one in three users aged 18-29 view video online daily. What are these viewers
2008. This research focused exclusively on
consumers in the United States who have
watching? News, current events and comedy are the most popular forms of online
high speed Internet access at home and use
video programming, followed by movie trailers. Over half the respondents reported
the Internet for a minimum of three hours per
watching these three types of online video content. TV clips and sports highlights are
week from home for personal reasons.
5
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Recent advertising icon
viewed by the fewest consumers. When it comes to professional quality video compared
promoting the connection
to user-generated video content, 46 percent of the respondents preferred professional
of .tv to online video
quality video. Consumers most often watch online videos that run between one and five
minutes. The most popular format is clips lasting one to three minutes.
Source: VeriSign, October 2008
In terms of creating online video content, respondents were more likely to be viewers
than creators with only 10 percent stating that they create and post videos online. That
number grows to 15 percent in the 18-29 age group.8 Internet users tend to be engaged
with online video participating in social activities related to the online video content.
Forty percent of online video viewers reported that they had read others’ comments, 28
percent had looked at the ratings others had given the video and 21 percent had shared
the video or link with others.9
Three in four consumers use search engines to find interesting video content.
Recommendations from friends, bookmarked favorites and information from news,
advertisements and other media sources are other frequently used strategies.10
Given the growth in online video, many companies are offering products and services
related to online video. From creation and distribution to equipment, advertising and
promotion, companies are seeking to service this growing online activity. In the domain
name space, the .tv TLD is positioned as the TLD for rich media and video content.
Registrars and registrants are promoting .tv to both businesses and consumers who
would like to take advantage of online video. It appears that a mix of businesses and
consumers have registered .tv domain names. A recent study that sampled .tv Web sites
found that approximately 60 percent are registered by businesses and approximately 40
percent are registered by individuals.11 While .tv is still a relatively small TLD in terms of
base size, it was the fifth most recognized TLD behind .com, .net, .gov and .org among
the more Internet savvy users in the US.12 Given the more mainstream adoption of
online video, the .tv TLD is well positioned for continued growth.
+ Learn More
To subscribe or to access the archives for the Domain Name Industry Briefs, please
go to www.verisign.com/domainbrief. Email your comments or questions to
domainbrief@verisign.com.
Zooknic Methodology
+ About VeriSign
For gTLD data cited with Zooknic as a source,
the analysis uses a comparison of domain name
VeriSign, Inc. (NASDAQ: VRSN) is the trusted provider of Internet infrastructure
root zone file changes supplemented with
services for the networked world. Billions of times each day, VeriSign helps companies
whois data on a statistical sample of domain
names which lists the registrar responsible for a
and consumers all over the world engage in communications and commerce with
particular domain name and the location of the
confidence. Additional news and information about the company is available at
registrant. The data has a margin of error based
on the sample size and market size. The ccTLD
www.verisign.com.
data is based on analysis of root zone files. For
more information, see www.zooknic.com.
©2008 VeriSign, Inc. All rights reserved. VeriSign, the VeriSign logo, and other trademarks, service marks, and designs are registered
8 “Consumer Online Video and Domain Name
or unregistered trademarks of VeriSign and its subsidiaries in the United States and in foreign countries. 12/08.
Study.” Greystones Consulting Group, July
2008.
Statements in this announcement other than historical data and information constitute forward-looking statements within the
9 “Video Content: Harnessing a Mass Audience.”
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements
eMarketer, November 2008
involve risks and uncertainties that could cause VeriSign’s actual results to differ materially from those stated or implied by such
10 “Consumer Online Video and Domain Name
forward-looking statements. The potential risks and uncertainties include, among others, the uncertainty of future revenue and
Study.” Greystones Consulting Group, July
profitability and potential fluctuations in quarterly operating results due to such factors as increasing competition and pricing pressure
from competing services offered at prices below our prices and market acceptance of our existing services, the inability of VeriSign to
2008.
successfully develop and market new services, and the uncertainty of whether new services as provided by VeriSign will achieve market
11 VeriSign analysis, September 2008.
acceptance or result in any revenues. More information about potential factors that could affect the company’s business and financial
12 “Consumer Online Video and Domain Name
results is included in VeriSign’s filings with the Securities and Exchange Commission, including in the Company’s Annual Report on
Study.” Greystones Consulting Group, July
Form 10-K for the year ended December 31, 2007, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. VeriSign
2008.
undertakes no obligation to update any of the forward-looking statements after the date of this presentation.
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