Rightside talks about New gTLD domain renewals (and re-renewals)

Since the first New gTLDs started launching in early 2014 and since two Rightside-owned gTLDs, .dance and .democrat, went live in May of 2014, the question many domain-industry watchers were asking is how popular new domain extensions would be.

Rightside tries to give some insight into that by sharing some of the renewal rates for year 1 and year 2 of 7 extensions. Rightside believes that raw registration numbers are just one metric of successful TLDs. The other is actual usage.

Out of Rightside’s portfolio of 40 gTLDs, seven have been generally available for over two years: .DANCE, .DEMOCRAT, .NINJA, .IMMOBILIEN, .SOCIAL, .REVIEWS, and .FUTBOL. Through the end of August 2016, these extensions accounted for about 30,000 domain names eligible for two full renewal cycles. Of these, roughly 21,000 (69%) were renewed for a second year. And of those 21,000 domains, approximately 17,000 (81%) were renewed for a third year.

Rightside believes that 2 factors helped the renewal rates:

1. domain investors with portfolios including new gTLDs recognize the long-term value of these domain names, and rather than let them drop after the first year, are holding onto them to find the right buyer continue to earn parking revenue.
2. Second—and likely the more significant driver—is that end users are actually picking up these domain names and putting them to use. Domains fully built out with websites or used actively as a redirect are more likely to be renewed in the first year, second year, and beyond.

First of all I have to say: “What parking revenue?”.

The 3rd factor that Rightside is not addressing is that at these small domain registration numbers the percentage of defensive (trademarked or not) domains is very high.

Finally the 2nd year renewal rate (81%) on the domains that were renewed once already doesn’t seem that high to me. But I could be wrong.

Here is what Rightside said about the renewal rates on 7 out of the 40 extensions in its portfolio that have been available for more than 2 years:

“Tracking renewal rates is another way to fill in the picture of domain space’s health. And on this count, we’re happy to report that Rightside gTLDs are not only seeing a healthy number of renewals, but they’re also improving year over year, too.

What do the numbers look like? Well, of Rightside’s portfolio of 40 gTLDs, seven have been generally available for over two years: .DANCE, .DEMOCRAT, .NINJA, .IMMOBILIEN, .SOCIAL, .REVIEWS, and .FUTBOL. Through the end of August 2016, these extensions accounted for about 30,000 domain names eligible for two full renewal cycles. Of these, roughly 21,000 (69%) were renewed for a second year. And of those 21,000 domains, approximately 17,000 (81%) were renewed for a third year. That improvement in the renewal rate going into year three is very good news for the future of domains.

Broken down by domain extension, we see some great trends, as well. Our first gTLD to market, .DANCE, saw a 70% renewal rate in year one expand to 83% in year two for that same subset of domains. Our best performing gTLD of the seven is .IMMOBILIEN, which renewed at 83% in its first year, and grew to a stupendous 87% in its second—which certainly makes sense given the permanent nature of real estate.

What do the improving rates of renewal say about these domain extensions? We have a couple of theories. For one, domain investors with portfolios including new gTLDs recognize the long-term value of these domain names, and rather than let them drop after the first year, are holding onto them to find the right buyer continue to earn parking revenue. Second—and likely the more significant driver—is that end users are actually picking up these domain names and putting them to use. Domains fully built out with websites or used actively as a redirect are more likely to be renewed in the first year, second year, and beyond.

It will be September 2018 before our latest gTLD to market, .GAMES, will hit its two-year anniversary. So, while time will tell how the full Rigthside portfolio will perform on long-term renewals, it’s fair to say, we’re very happy with the early results and believe we’ll see similar results in the coming months as more extensions hit their second renewal cycle. More importantly, we view improving renewal rates not just as a validation for the health of the Rightside portfolio, but also as an early indicator for the growing popularity for new gTLDs in general.”