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Ancestry.com Inc. (ACOM) |
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WIKI ANALYSIS
Ancestry.com is the world’s largest online family history resource, with nearly 1.4 million paying subscribers around the world. Prior to its IPO, the company had pioneered the market for online family history research. By developing and acquiring efficient and proprietary systems for digitizing handwritten historical documents, as well as establishing relationships with national, state and local government archives, historical societies, religious institutions and private collectors of historical content around the world, subscribers pay money to Ancestry.com to attain information otherwise harder to uncover. The graying populations in developing countries, as well as the wide surplus of populations yet untapped offer tremendous opportunity for Ancestry.com to wield its current unchallenged domestic market position.
Business Growth
Ancestry.com divides revenues from two major sources:
- Subscription Revenues (95% of total revenues) primarily come from access to the company's services via various Ancestry.com Web sites. Of this, the majority of subscription revenues come from either the U.S. or U.K.
- Product and Other Revenues (5% of total revenues) include sales of desktop software (Family Tree Maker), physical delivery of copies of historical vital records (birth, marriage and death certificates), DNA testing (Ancestry.com DNA), advertising, digitization services, genealogical research services and other products and services[1]
Continued operational performance in Ancestry.com is highly dependent upon the new subscribers it may retain, as well as the continued payment of current subscribers.
Trends and Forces
The Graying of Developed Countries help ACOM's Greatest Customer Base, the Elderly
With a current 39.6 million elderly people (+65 of age) in the U.S., ACOM's current 1.6 million subscriber base is considered small.[2] Because most of ACOM's subscribers come from the elderly, the population of seniors will greatly influence the amount of revenues ACOM may derive. However, with the graying of many developed countries such as Japan and the U.S., ACOM is naturally being helped by this factor as it is increasing the number of enthusiasts into its pile. As the world's largest online family resource, ACOM is poised to contain the greatest weight of that gain.
International Markets Represent the Next Big Opportunity
Currently, roughly 90% of subscription revenues come from either the U.S. or U.K.[3] Many other developed countries also contain readily accessible records, which potentially may lead to future revenues. But an increase in the digitization of records from developing countries will lead to the biggest gain for ACOM, should the company choose to invest in the venture. Some of the most populous countries such as China and India have also the largest elderly populations. Should the records become digitized in these countries, ACOM can take advantage of an even larger base of revenue subscriptions.
Competition
For the most part, ACOM does not have any direct pure-play competitors as it holds the world's largest market share in online search directories. However, the closest substitute for ACOM is an individually made trip to publicly disclosed records. Because ACOM primarily uses information from publicly released records, these same records may be found by users as well. On the web, users may also choose to use such Internet search engines found in Google (GOOG) and Yahoo! (YHOO).
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