About a month ago I participated in the Prestige Conference in Las Vegas. It was a very memorable experience because I got to meet with businesses thought leaders in the WordPress ecosystem.
I also had a blast hanging with guys like Andrew Munro / AffiliateWP, Kevin Gray / ApproveMe, Chris Klosowski / WPPush, Pippin Williams / EDD, Jeremy Green / Zeen101, and many other brilliant minds. Sharing our experience on different business topics, and learning from each other, was amazing. Thanks for being so open!
One of the main panels that I was in, focused on the addressable market of WordPress. Questions like, “How big of an opportunity is WordPress?”, and “How much money can be made from the ecosystem?” were discussed in great length.
WooCommerce is a great example of how a WordPress focused company can become a BIG and successful business. But is there room in the ecosystem for a billion dollar startup company besides Automattic?
Is there room in the ecosystem for a billion dollar startup besides Automattic?Tweet
This is a very important question to me, since I’m trying to convince investors that Freemius is going to be that company.
Now that there have been changes to the WordPress.org plugins repository, I believe that we have a better opportunity to quantify the market size of WordPress. Instead of basing results on the number of downloads and BuiltWith.com data, as many have done before, we can now attain a real insight into how big of a market WordPress is by looking at the number of the active installs.
I think knowing the number of total active plugin installs is key to understanding the WordPress market. From our own data with RatingWidget, WordPress shows that we have 10,000+ installs, while we actually have over 23,000+ active plugin installs. We know that since RatingWidget is a SaaS solution – “Serviceware” plugin. I decided to ask other developers about their own data and got similar results.
From looking at the numbers caught by Brian, from Post Status, right after the active installs feature was released, there are way more active installs than what the estimated field says.
After scraping the plugins’ .org repository and looking at the metric of the active installed plugins, we get to 110 million active installs. Adding the factor that this number is probably 50% less than what is going on due to the inaccuracy of the active installs count, we get to about 220 million active plugin installed on WordPress.org hosted sites.
Based on stats released by Yoast and Lorelle VanFossen on Mid 2012, WordPress.com is hosting ~50% of the WordPress sites on the web. Therefore we can assume there’s a similar number of active plugin installed on WordPress.com sites. It gets us to 440 million active plugins.
Based on the research we conducted three months ago on 10,000 self-hosted WordPress sites, we found that there are 25.2 plugins, on average, installed on an average active website. 18.3 of the plugins are active, 17.6 of these plugins have more than 200 lines of code.
Average self-hosted WordPress site has 25.2 installed plugins, 18.3 active plugins and 17.6 active plugins with more than 200 lines of code.Tweet
Using both of these variables, we can estimate how much WordPress websites are on the web. To calculate the amount of sites we divide the amount of active plugins per the average amount of plugins per site, which is 440 million divided by 18.6 — which is 24 million active WordPress sites.
According to BuiltWith.com CMS stats, there are only 14.7 million active sites, but our calculations show that the ecosystem is by 60% bigger.
There are 24 million active WordPress sites on the web!Tweet
Obviously, there are way more plugins outside of the official WordPress repository. Conservative assumption based on my feelings from the market is that there are at least the same amount of plugins out there. I’m not saying these plugins have the same number of active installs, but my intuition tells me there are an additional ~100 million active plugin installs which are not listed on the official repository.
So here is my very rough, but logical assumption. If a plugin with over 200 lines of code is actually installed and active somewhere, it means that it’s more than just a script wrapped in a plugin. It’s not a total crap and it’s actually worth something to someone. That means this plugin could have premium features that someone in the market potentially would be interested to pay for.
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Another huge but reasonable assumption is to say that 2% of the total active websites that using WordPress on the web are actually SMBs, and websites which generate revenues. Therefore these websites have money to pay for plugins (with RatingWidget we see 2.7% conversion to paid).
Since we’re discussing the total addressable market, thus the overall opportunity, let’s see what the numbers are if this 2% are actually paying for the plugins.
So we have roughly 540 million active plugin installs. 520 million of them have more than 200 lines of code. 2% of that 520 million would give us 10.4 million paid plugin installs. If an average plugin is worth $100 a year, we get to over $1B market only for plugins–boom!
WordPress plugins’ ecosystem is a Billion Dollar market – Period!Tweet
If we use similar assumptions regarding the themes market, we can easily add another $66 million to the table (33M sites X 2% X $100).
Next time you are meeting investors and they ask you about the market size, please confidently answer that it’s a big opportunity–at least a billion dollar market, and you can prove it!
As a side note, since we already scraped the WordPress.org repository, I want to ask you guys what data analysis you would be interested for us to cover in the next post!
There’s a lot of money passing through this unintended marketplace. I guessed at 30mil a year (https://wpchat.com/t/hey-im-matt-medeiros-ask-me-anything/795/24) your number seems a lot more realistic.
Will .org take a piece of this? Should they?
I’m all for a “verified partner” status if it means a tax.
I had a phone call with a VP @ Automattic few months ago trying to figure out the exact same thing. Based on his answer Automattic and WordPress.org are two separated entities + .org is a non profit, therefore he doesn’t see this happen during the next 3 years, Automattic definitely won’t try pushing it.
WordPress.com sites cannot run plugins. Or rather, WordPress.com comes with a number of pre-installed plugin-like features built into it already.
Thus, the actual number would not be 540M, but somewhere between 200M and 250M active plugin installs out there.
Also, don’t scrape WordPress.org. We make the data available via our APIs too. All you need to do is ask.
Thanks Otto for the “inside” numbers!
For the full discussion between Samuel and I, checkout this Reddit thread:
Otto is totally right that adding WordPress.com to the calculations is incorrect since there’s no real plugins there as we know them. Having said that, for the sake of TAM calculations, if these w.com “plugin-like features” could be potentially monetized we would probably get pretty much same numbers.
To summarize my thoughts, wether it’s a Billion Dollar Market or Half a Billion Dollar Market – the opportunity is BIG enough to raise VC funding!