The Real Reason 23andMe is Struggling: What They Got Wrong About DNA Testing
The article from Wired, titled 23andMe Is Sinking Fast. Can the Company Survive?, suggests that 23andMe is struggling financially, attributing this to waning interest in home DNA testing. It states, “One thing seems clear: Home DNA testing has lost its luster. 23andMe kits just aren’t as popular as they used to be.” However, I respectfully disagree with this conclusion. I believe that DNA testing kits remain as popular as ever, but 23andMe missed the mark by not focusing on the core aspects that originally made these kits desirable.
Missed Genealogy Focus
When comparing 23andMe to other major DNA testing companies like Ancestry, MyHeritage, and FamilyTreeDNA, it becomes clear why 23andMe is facing profitability issues. AncestryDNA, with its market-leading 22 million DNA samples[2], has excelled by concentrating almost exclusively on genealogy. Similarly, FamilyTreeDNA and MyHeritage have found success in balancing genealogy and niche offerings such as Y-DNA and mtDNA testing.
By contrast, 23andMe's focus on health and trait reports has alienated genealogy enthusiasts. While 23andMe has prioritized direct-to-consumer genetic health testing, this strategy has come at the expense of expanding its genealogy capabilities. Genealogists, the largest audience for DNA testing, are not just seeking health insights; they are primarily interested in solving complex family mysteries, such as paternity issues and discovering unknown ancestors. As technology advances and more matches appear, the need for genealogy-related DNA services continues to grow.
One-and-Done Approach
Unlike 23andMe’s one-time focus on health testing, genealogy-based DNA services offer ongoing engagement. Most genealogists understand that their DNA testing needs are endless, as tracing family lines and solving genealogical puzzles can span generations. Many users begin their research by looking for their parents in cases of adoption or paternity questions. However, as they take their trees further back in time, they often discover long-standing paternity issues—showing that such mysteries are not a modern phenomena.
The parents who raised a child in the past may not have been their biological parents, and uncovering these details requires revisiting DNA matches over time. Ancestry, FamilyTreeDNA, and MyHeritage provide tools that allow genealogists to continually reference their DNA results, using new matches as they emerge. These sites also provide the users with a platform from which to build their trees. As they build the tree they continue to find new uses for their DNA matches new discoveries and mysteries emerge in their ancestry. This is where 23andMe missed the true long-term profitability. By focusing too heavily on health, they failed to capture the repeat engagement that genealogy-based companies capitalize on, ensuring that users return time and again as new matches and technological advancements unfold.
Revenue and Partnerships
Additionally, AncestryDNA and MyHeritage supplement their revenue with ongoing subscription services that provides tools and records that entice the user to continually return. This recurring revenue stream contrasts with 23andMe’s one-and-done model, where customers make a single purchase and rarely return. This subscription-based model is an essential factor in the long-term profitability of genealogy-focused companies.
In terms of perceived value, both 23andMe and AncestryDNA charge similar base prices for ancestry tests—ranging from $99 to $119. However, 23andMe's health reports come with a much higher price tag, reaching over $229. In contrast, AncestryDNA and MyHeritage supplement their revenue through subscription services, allowing ongoing access to genealogical resources and tools. This recurring revenue model provides a steady income flow, something 23andMe lacks due to its one-time purchase structure.
Furthermore, while 23andMe has focused on partnerships in the pharmaceutical and biotech sectors, this approach has diminished appeal to genealogy enthusiasts. AncestryDNA, on the other hand, has forged partnerships centered around family history, aligning with the core interests of their user base.
Conclusion
In conclusion, while the Wired article suggests that home DNA testing is losing popularity, I argue that the demand for these kits remains strong. The real issue lies in 23andMe’s decision to focus on health testing while neglecting genealogy. By doing so, they have alienated a substantial portion of their potential customers—genealogists who view DNA testing as an ongoing tool for uncovering their family histories. Companies like Ancestry, MyHeritage, and FamilyTreeDNA have recognized this, prioritizing genealogy over health and providing long-term value to their users. As technology improves and genealogical mysteries continue to unfold, the demand for DNA testing will remain robust, particularly in the genealogy space, where repeat customers are the key to sustained profitability.
Sources:
1. * '''WIRED 23andMe Is Sinking Fast. Can the Company Survive?''': Emily Mullin, ''23andMe Is Sinking Fast. Can the Company Survive?'' First Published: Oct 1, 2024 4:41 PM [https://www.wired.com/story/is-23andme-dead-at-home-genetic-testing-anne-wojcicki/ 23andMe Is Sinking Fast. Can the Company Survive?] (accessed 2 October 2024)
2. * '''Genealogy Explained''': Marc McDermott, ''23andMe vs Ancestry DNA'' First Published: March 8, 2018 | Updated: April 2, 2024 [https://www.genealogyexplained.com/dna-testing/23andme-vs-ancestrydna/ 23andMe vs Ancestry DNA] (accessed 2 October 2024)
Websites:
1. Ancestry.com
2. 23andMe.com
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