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Increased Consolidation and Domination by Large Players

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Increased Consolidation and Domination by Large Players


Increased Consolidation and Domination by Large Players

When it comes to the most popular apps in the US by audience size, Tinder, Plenty of Fish, Match and OkCupid lead the pack (respectively). However, when it comes to user engagement, Grindr (12 hours 26 minutes/month), Tinder (2 hours 39 minutes/month), OkCupid, and Bumble are at the top. And, while Tinder is the most popular among 18-29-year-olds, Match is most popular for the 30-44 demographic.

Still, when it comes to actual ownership by company, these two models become more blended. The biggest player in the online dating game, the Match Group, dominates 25% of the market share. The second largest competitor is eHarmony, with just under 12%. Users might not realize that Match Group actually comprises 45 brands, including big names such as Match, OkCupid, and Tinder, and it IPOed in 2015.

There are two factors that have shifted the landscape towards the giants in the market, the first of which is the huge success of milf free Tinder. According to Justin McLeod, CEO of Hinge, “…ultimately, Tinder is the gorilla in the casual end of the spectrum, which is our space. Tinder has the lion’s share. Maybe one or two of these other ones will survive, and be profitable, but the only reason they exist right now is they’re operating off venture capital. Very few of the newer apps will end up lasting. Most of them are gone almost as quickly as they show up.”

The second is the Match Group’s 2015 IPO. Match’s size works to its great benefit since users switch frequently between its sites. With so many dating sites, it can encourage customers to try out its other sites as well. As a quick aside, there’s a controversial history between Whitney Wolfe, founder of Bumble, and Justin Mateen, co-founder of Tinder-making the Match Group’s attempted $450 million acquisition of Bumble that much more contentious.

Overall, it’s a difficult market to break into because of the nature of the product. Dating apps are essentially another form of social media, where a product’s value often hinges on how many people are on it and using it. New sites may have difficulty garnering more users, and, according to OkCupid’s chief product officer Jimena Almendares, “If you visit a product and there aren’t that many people to see, the likelihood of you coming back is going to decrease rapidly. Even though online dating is growing and it’s a more normal thing than ever, it’s hard for new sites because they can’t get enough people.” This hasn’t stopped niche dating apps from launching like wildfire, including the likes of Gluten Free Singles, Clown Dating, and Bristler (for beard lovers), niche sites experience difficulty building scale and can be difficult to compete with larger sites that offer detailed filtering options.

A Note on VC Investment in The Online Dating Industry

It’s perhaps due to this dynamic that the tech and venture capital world has been tepid in its dating app investments. According to PrivCo, while funding was up in 2014, the size of individual rounds is ounts of funding are generally not enough for the large marketing budgets that dating apps require for user acquisition. From early 2016 to 2017, early-stage startups only received $7 million in funding.

San Francisco-based dating app Zoosk had raised more than $60 million in funding since its inception in 2007, but formally withdrew its plans to IPO in 2015, citing “unfavorable market conditions

In addition, though venture capitalists have poured close to $150 million into the industry from early 2010 to 2015, dating startups and VCs can be mismatched from a strategic standpoint. While VCs are notoriously seeking loyal and longer-term users, dating apps tend to attract periodic users without much loyalty and who like to switch between services. On top of that, monetization for dating apps has been slow, with apps wanting to focus first and foremost on the user experience. We will discuss dating app monetization and business model in the next section. It’s worth noting that Tinder, one of the most successful US dating apps, was incubated by giant IAC in 2012 and thus didn’t require VC funding. In addition, the dating giant Match Group is also owned by IAC. ”

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