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  • Mal McCallion

Review of the Year: Portal Wars are Back!



 

Just when you thought emptying £2,000 per month of your hard-earned agent commission into Rightmove’s vast pockets was inevitable, an unlikely saviour emerged this year.

 

OnTheMarket had become a much more approachable and cheerful portal under CEO Jason Tebb’s leadership – but it still wasn’t landing significant blows on Rightmove. However, his approach has seemed to have attracted the attention of genial CoStar leader, Andy Florance. His $34Bn company completed the acquisition of Tebb’s #3 market player this year, with big promises to make a significant difference to Rightmove’s dominance – and justifiably pointed to the States, where they were making big growth strides with Homes.com and Jeff Goldblum-championed Apartments.com.

 

Making dents in Rightmove’s dominance is no straightforward task. I have personal experience of going up against them with Zoopla in 2008 and Primelocation back in 2000. Whilst we made some initial inroads, the cost of mounting a sustained challenge over a decade or more stretched the patience of investors, such that both ended up being sold before any permanent damage was inflicted on Rightmove’s ability to continue to increase its inflation-busting prices.

 

With a single investor in CoStar with huge pockets and which has committed to making a difference in the market, we’re into a new era of portal wars – not that Rightmove is outwardly expressing any concern. Its Investor Day a month ago was a for-the-ages demonstration of quasi-monopolistic hubris. It was only because the investors present insisted on asking, repeatedly, about CoStar’s arrival in the market that Rightmove’s new CEO, Johan Svanstrom, deigned to even acknowledge that they existed. The response – “We have always had competition” – was dismissive and minimal, before continuing to explain how Rightmove was going to nearly double its revenue and profits.

 

Having utilised their long-standing ‘network effects’ and first-mover advantage to build a behemoth that commands an insulting 73% margin, Rightmove has no plans to slow down its share of agents’ wallets. Indeed, in the next 5 years it explicitly is going to aim to grab £1,953 of average revenue per branch – that’s +average+. Recognising that larger agents pay significantly less per branch, this means that very many of their customers will be paying significantly more.

 

So can CoStar succeed where so many have failed and help agents to stem this existential bleed? It will take time, patience, an excellent long-term strategy and superior execution. But, finally, there is a chance. It has to be supported as the alternative is what we’ve seen before – a ravenous, single-minded Rightmove that will stop at nothing to further accrue revenues from its agent customers, regardless of the impact on them.

 

For the good health of the industry and its participants, they have to be stopped.

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