There is no denying the dominance that Rightmove has within the UK real estate market.
Since it was founded in 2000 as a joint venture between the four of the biggest real estate agencies—Halifax, Countrywide, Connells and Sun Alliance—the company has experienced continued expansion and growth. However, as a new decade dawns, Rightmove is finding new issues only a company of its size can run into.
In its opening years, Rightmove brought a new approach to real estate agent advertisements. The company created a portal where both buyers and agents would go to first to search for, advertise, and purchase a property. By bringing agents together with consumers onto one simple platform the company has made itself crucial to the UK real estate market.
This transition to online real estate advertising was ramping up as the traditional forms of print were beginning to decline. In 2002, Rightmove launched its first property site and charged to advertise properties that were for sale. By 2004, the portal had 50% of the agents within the UK. Within years the company added rental properties, reached over one million listings, launched mobile versions of its platform, and became the de-facto place to list properties.
With consistent year-over-year growth in revenue and profits, it isn’t hard to imagine a more attractive company for investors. Rightmove launched a share buyback program in 2007, and by 2010 had returned over £140 million via those buybacks.
Rightmove managed to take over the market by delivering positive results to everyone. Advertisers and agents were happy to support a platform that drove business directly to them. Consumers were happy to have a convenient place to gather information, search for homes and properties, and contact sellers. And investors saw a continued return on their investment with increasing dividend per share prices.
Even with the wind in their sails, Rightmove may be heading toward rough seas.
In the early and mid-2000s, Rightmove’s digital platform was a rarity. Agents and advertisers were mainly relying on print media to inform and entice consumers to buy. Nowadays there are more digital platforms than ever which may allow advertisers who once relied heavily on Rightmove to reposition themselves. Despite that intense innovation from twenty years ago, now agents need to stay ahead of the constantly evolving curve. Without innovation, many agents could find themselves out of the market. The market that Rightmove currently dominates might be rife for competition. Companies have diversified their services for both advertisers and consumers.
Even if that direct competition doesn’t arrive, the company could face another kind of struggle. Year-over-year revenue growth has steadily fallen since 2014 dropping below 10% growth for the first time in 2018. As fewer revenue streams into the company, they are tightening costs but not shifting strategy.
When Zillow began running into the same revenue slowdown the company began investing in other parts of the real estate transaction business. In the summer of 2019, Zillow revealed plans to potentially move into the house flipping market and has been purchasing mortgage companies ever since. This will allow Zillow to add new revenue streams and keep their investors and agents happy. Rightmove is sitting still.
Rightmove’s biggest weakness may be its agents. Agents have seen Rightmove subscription fees continually rise and over time some have left the platform. As new platforms are launched and provide more options agents will naturally be drawn away. Even with a dominant position within the UK market alternatives don’t stop at the border and over time more agents will exit the portal when given better opportunities.
It isn’t all doom and gloom for Rightmove. The company can still boast a massive network of agents and advertisers that will attract customers for years to come. Even as revenue weakens every year the downturn doesn’t match that of rivals like Zillow. The answers to Rightmove’s problems are only new to them, not to others. If the company is able to find a new way forward, boost its consistent growth, and make nice with the agents who are unhappy the future could be a very bright one.