I need to determine the addressable market size for an investment
research product. I would be nice to get this broken out for North
America, Europe and Asia if possible.
The ‘product’ is information that can be presented in several ways,
which include, but is no limited, to (1) delivery in printed or
soft-copy report format, (2) pictorially depicted on graphs online,
(3) provision online through a website, and (4) provision through
desktop trading platforms or market data terminals.
The following are the market segments that I have identified for
investment research products. There may be others so please don’t
necessarily limit yourself to those I’ve listed.
- online brokers (E*TRADE, Ameritrade, Schwab etc.)
- full service brokers (Merrill Lynch, Morgan Stanley, Fidelity etc.)
- integrators (Sungard, Pershing, Telekurs Financial etc.)
- aggregators (FactSet, Interactive Data Corporation, RIMES etc.)
- institutional terminal providers (Reuters, Thomson, Bloomberg etc.)
- trading platforms (Realtick, Neovest, Belzberg, eSignal,
TradeStation, eSignal etc.)
- desktop charting program (MetaStock, AIQ, TC2000 etc.)
- investment research sites (Yahoo Finance, Prophet.net, BigCharts,
Quote.com etc.)
- report resellers (Yahoo Finance, theStreet.com, Multex, CBS
MarketWatch)
The following paragraphs describe each segment and identify what I
think is the relevant metric for sizing the segment:
Online Brokers (metric = online accounts)
-I have pretty good numbers for the online broker market. Don’t spend
any time investigating this. For my purposes, online brokers are
sized based on the number of non-dormant accounts they have. Within
the non-dormant accounts, we generally segregate accounts into hyper
active, active and regular. The ‘SSB online brokers Q3 2002.pdf’
report at www.stern.nyu.edu/ecommerce/readings/ provided most of what
I needed.
Full Service Brokers (metric = ?)
-I expect this market can be ignored because I think it can be reached
through institutional terminal providers and other middlemen (not sure
who – maybe Reuters) that supply research to these firms. I suspect
they tend not to buy from small providers of independent research.
Integrators (metric = online accounts and/or institutional or
professional desktops)
-These are very large firms that provide varied financial services,
but in particular they provide back-end services to smaller brokers
and/or correspondent brokers. It might be possible to view these like
medium to large size on-line brokers. Problem is, it’s tough to get
any estimates for the number of firms or number of accounts they
serve.
-These firms also provide institutional desktops and trading
platforms.
Aggregators (metric = ?)
-These are firms that aggregate research databases and resell the
information to institutions to companies. I tend not to consider
companies that sell to retail users here (see Report Resellers).
-Useful data would be the price aggregators pay for data, the number
of institutional clients they serve and whatever other metrics can be
used to size the segment.
Institutional Terminal Providers (metric = institutional or
professional desktops)
-These terminals are generally provided to institutions (as opposed to
individual professional day traders). For example, Thomson recently
landed a contract to provide 30,000+ terminals to Merrill Lynch.
Thomson also just landed a deal to provide terminal to the Royal Bank
in Canada.
-It’s pretty easy to get number for the big players I’ve listed.
Thomson has about 150,000 terminals, Bloomberg around 170,000 and
Reuters around 400,000. In addition to confirming these numbers, I’m
interested in finding numbers for other providers into this space.
Trading Platforms (metric = desktops)
-These are desktop software application that are used by day traders
or by day-trading firms. The software provides research tools and
enable orders to be placed directly from the application. Day-trading
firms are firms where individuals go to day-trade. They trade either
with their own money or with the firms money. For example, Worldco is
a day-trading firm where people trade the firms money.
-These desktop applications are also used by day-trader who work from
their homes.
Desktop Charting Programs (metric = desktops)
-These are program used by active traders, but generally not by
day-traders. These program do not generally provide orders to be
place from within the software. Instead these users need to go to
their brokers web site or call the broker to place the order.
Investment Research Sites (metric = paid subscribers)
-These are site that sell subscriptions to investment research.
Report Resellers (Metric = ?)
-This are web sites that sell research reports to the public. Yahoo
Finance and Multex are the best examples that I know of.
Thanks for tackling this problem. There’s a lot of information here
but I’ll do my best to provide any clarification required,
Regards,
Delos |
