By J. Edward Moreno
As online dating became as easy as swiping a finger across your phone screen, the companies who own apps such as Tinder and Bumble became Wall Street darlings. But about a decade later, those platforms are now struggling to live up to expectations, and investors have grown frustrated and eager for something new.
Match Group and Bumble, which make up nearly the entire industry by market share, have lost more than $US40 billion ($60.5 billion) in market value since 2021. Even in an age when the apps are a staple on people’s smartphones, the two companies are laying off workers and reporting lacklustre revenue growth.
Match Group and Bumble have lost more than $60.5 billion in market value since 2021.Credit: iStock
Both companies face one critical obstacle: not enough young people are willing to pay for subscriptions to dating apps, partly because younger daters are increasingly looking to platforms including Snapchat and TikTok to make connections, and it’s not clear what will change that.
Match Group and Bumble generate the bulk of their revenue, about $US4.2 billion for both companies last year, by selling subscriptions, with smaller income streams from advertising. But they’re struggling to increase those sales. Match Group was able to keep revenue steady last year only by raising its prices.
As far as investors are concerned, the businesses need to convince more young users to pay.
“Wall Street loves subscription models because it gives them the comfort of recurring revenues,” said Youssef Squali, an analyst at Truist Securities.
By paying, users can unlock features such as unlimited swipes and the ability to see who has swiped on them. But for many people, that’s not enough: unlike other paid subscription services, such as Spotify or Netflix, dating apps can’t guarantee that you’ll find what you’re looking for.
“It feels really different to pay for access to people,” said Kathryn Coduto, a Boston University professor who studies dating apps. “Paying for it makes it feel a little skeezy.”
In the United States, 30 per cent of adults, and more than half of adults younger than 30, use dating apps, according to a survey by Pew Research Centre that was released last year. About one-third of dating app users reported paying for them, with men and higher-income adults more likely to pay than others, the survey found.
Millennials, the nation’s largest generation, were prime dating age when Tinder first rolled out, but more and more of them have married in recent years, a decision that usually results in people quitting the apps.
Now the primary users are from Gen Z, a younger and smaller demographic with less disposable income. That generational shift poses a challenge for the dating app industry.
Mandy Wang, an 18-year-old student at New York University, said she preferred to meet people in person or through a direct message on platforms such as Instagram or Snapchat. Dating apps are for casual use, “like a game”, she said.
“People use dating apps, but I don’t know anyone who pays for it,” Wang said. In fact, she said that she would consider it an “ick” if she learnt somebody was paying for a subscription.
Jess Carbino, a former sociologist for Tinder who is now a consultant and dating coach, said younger people “still feel a desire to use online dating apps, but they’re not necessarily experiencing a sense of urgency to find a partner.
Bumble has even had a marquee at Flemington on Melbourne Cup Day.
“I think what we’re seeing is purely a demographic shift,” Carbino said.
Match Group and Bumble declined to comment on their plans to draw in more paying users, pointing to public statements made by their executives.
Bumble CEO Lidiane Jones told analysts last month that the company would be revamping the app to appeal to more users, particularly younger ones, by adding “personalisation and flexibility” to the experience.
Bumble’s larger competitor, Match Group, was an early player in the online dating market, starting with Match.com in 1995. The company acquired Tinder in 2017 and Hinge in 2018, kicking off a period of growth that caught investors’ attention.
Tinder is the largest brand in Match Group’s portfolio and the most popular dating app in the United States.Credit: Bloomberg
Tinder is the largest brand in Match Group’s portfolio and the most popular dating app in the United States. It shook up the industry landscape in 2012 when it introduced a swipe feature, which is now ubiquitous in dating apps. But the swipe’s novelty has worn off, and Tinder has lost momentum. The number of paid users on the app was down nearly 10 per cent in 2023.
Match Group CEO Bernard Kim told analysts in a January 31 earnings call that this year that Tinder was “adopting a fast-fail mentality, a strategy that prioritises rapid experimentation and testing”.
He said the company would attract more paying users through marketing and that it was adjusting its products in various ways, including introducing á la carte premium features.
Match Group has also expanded its offerings, such as a service for LGBTQ dating, called Archer, and one marketed toward Latinos, called Chispa. Revenue from those products was down 4 per cent in 2023.
Kim said Tinder was reimagining the swipe feature altogether and would introduce new functions this year. The platform is also pushing for more users to become verified, a move that’s aimed at improving safety and helping women feel more comfortable using the app.
The struggles of the broader dating app industry are in part because the format is substantially the same as it has been for more than a decade, said Zach Morrissey, an analyst at Wolfe Research, a financial research firm. But the way people date may have shifted.
“This is a space where product innovation has been relatively muted in recent years,” he said.
That’s starting to hurt. Bumble, which went public in 2021, initially jumped in value but after a steady slide its stock is now about a quarter of its initial public offering price. Match Group’s stock price reached a high of $US169 in 2021. It now sits at $US34, about one-fifth of its peak value.
‘The demand for connection and love continues to be really strong; 2 billion single people around the globe.’
Bumble CEO Lidiane Jones
Match Group and Bumble have made some changes recently to convince investors that they can turn things around, but it’s unclear what will solve their problems. “There’s not an obvious silver bullet that they need to address,” Morrissey said.
“The demand for connection and love continues to be really strong; 2 billion single people around the globe,” Jones told analysts in February. “Yet the products that are bearing the set of experiences to create those connections are not serving users the way that they want to.”
Despite the challenges, the dating industry isn’t going anywhere, said Ken Gawrelski, an analyst at Wells Fargo.
“Dating, overall, and love, more generally, is a core human behaviour,” he said. “So it’s hard to believe that changes materially. But the way we date, or the way we find matches, is very much an issue in this discussion.”
This article originally appeared in The New York Times
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