Business of Dating Apps
Valentine's Day Special
It may be hard for some to remember and for some it may be hard to even imagine that there was once a time, when going on a date with a stranger you met online was a strange concept.
Nowadays, no matter whether you’re looking for Mr/Miss Right or Mr/Miss Right Now, they’re seemingly just a click or swipe away, with online dating being 3 billion USD worldwide industry.
So how did it come to this? Who are the biggest players? What are their dark secrets? What is the user penetration. And is it a dead end or is it going to go up?
From the first personal ad to computerised compatibility and apps with STI notification… We seemed to have come a long way.
Fun facts from history:
Then in the noughties (as in 1 January 2000 – 31 December 2009) we get Skype, Social Media, and from there on it becomes harder to keep track.
DID YOU KNOW?
YouTube was originally to be a Video Dating platform.
2005 – concept was an online video dating service set up by Chad Hurley, Steve Chen, and Jawed Karim (while working for PayPal) called ‘Tune In, Hook Up’. The idea failed. BUT we ended up with the world’s biggest video sharing platform.
When it comes to dating apps we can most simply divide them into 2 categories: On the one hand we have a compatibility pairing service (where you complete questionnaires about yourself and about what you are looking for in a partner). While on the other – just linking to your social media profile, no questions asked. And then swipe right or left if you fancy or not.
The highest kept secrets of dating apps are THE ALGORITHMS. Most of the apps use a method called collaborative filtering. It’s a common technique used when it comes to building intelligent recommender systems that can learn to give better recommendations as more information about users is collected.
For example, if you display the behavior of not favoring blonde men, then the app will show you less or no blonde men at all.
The algorithms are the intellectual property of these companies, so they are not publicly available. Their entire business is based on developing smart match-making algorithms and keeping their formulas private.
FOOD FOR THOUGHT
Wouldn’t it be in the app’s favour that you don’t find your match…at least not for a while? Is the algorithm helping you to find your match OR is it set to keep you on the app.
So who are the Biggest Players and how much are they actually worth?
The most dominant player is The Match Group and its biggest asset Tinder having around 50 million active users (available in nearly 200 countries and in 40 languages).
Tinder is the number one top-grossing non-game mobile app!
Its revenue stood at $1.15 billion in 2019 representing 56% of Match Group’s total revenue of $2.05 billion (Source: Tech Crunch and Wikipedia)
Some that are owned by Match Group: Match.com, Meetic, OkCupid, Hinge, PlentyOfFish (and more).
And some that are not:
Bumble, the one who got away.
Whitney Wolfe Herd, the co-founder of Tinder, founded Bumble shortly after leaving Tinder. Wolfe Herd sued Tinder for sexual discrimination and harassment and settled for just over $1 million in September 2014. Soon after that Whitney formed a partnership with Andrey Andreev (founder of another dating app – Badoo) and the pair started working on a new dating app. Soon after, another 2 Tinder departees joined in (Chris Gulczynski and Sarah Mick) to work on the interface and help to launch the new app. In December 2014 Bumble was released.
Recently Bumble has soared to a market value of more than $13bn after listing shares, making Whitney Wolfe Herd a self-made female billionaire at the age of 31.
Another popular app in UK not owned by Match:
Grindr with a revenue of $100 million according to the owner, in an interview with. Here comes more help from technology: Grindr allows members to use GPS positioning, so they can also filter the matches by distance. This feature of course does not come free of criticism, controversy, violation (Authorities in some countries allegedly use the app to track and arrest homosexual men). Grindr may become the one of the first apps to introduce another new feature: STI notifications, so members can let their partners know (without having to contact them directly) if they test positive. Grindr has not officially confirmed that it’s testing the feature, but has made the following announcement: ”We are exploring several additional sexual health-related features for our application”.
Let's talk numbers
User penetration will be 4.9% in 2021 and is expected to hit 5.7% by 2024.
Some experts claim that, despite the need still out there, online dating sites are a business dead end. Is it a good place for a startup? Since the the market is already saturated with competitors, your reputation is on the line since the business area can be fraught with misrepresentation (with large percentage of users claiming to be not who their are) and, probably the main issue, businesses like these need thousands or millions of existing users before paid users and advertisers are interested in getting involved. The best chance may be being specific about who to target and going after a niche.
Either way – love is always in the air in Enterprise Starter simply because we love what we do.
Wishing you a happy Valentine’s Day. ES.