There has been speculation that Match Group’s star performer in the online dating space – dating app Tinder – would cannibalize its other online dating companies. But so far, contrary to analysts’ reports, this hasn’t happened.
Tinder is by far the dating app industry giant, with over 25 million active users and about 1 million paid subscribers in its tiered program. Some analysts have feared that because of Tinder’s rapid growth and free platform, it would mean users would leave other popular online dating sites in Match Group (like Match, Plenty of Fish and OkCupid) to join Tinder, making them obsolete.
What they found instead was that Match Group’s overall earnings were up in the first quarter of 2016, thanks in part to the POF acquisition and Match Group’s strategy to grow and invest in Tinder’s rivals.
Overall revenue came in at $285 million in its first quarter, $3 million over expected revenues.
Greg Blatt, chairman and CEO of Match Group, said in the first quarter earnings release: "Match Group posted very strong revenue and Adjusted EBITDA growth in the first quarter, driven by exceptional growth at Tinder, solid performance of Meetic and Match, and the PlentyOfFish acquisition."
Bank of America Merrill Lynch explained that "even without Tinder, Match would have grown its core Dating subscribers by 6% (up from about 1% last quarter) and its Dating revenue by significantly more."
The POF acquisition is an important factor in the revenue numbers. The dating website grew tremendously itself over the years with 70 million registered users, and operated for many years on a shoestring budget with one employee, Markus Frind, who created the dating site and sold it to IAC (Match Group’s parent company) for $575 million in 2015.
Over time if Tinder’s popularity continues to grow, and the app itself makes improvements that resonate with its users, then there could be an impact to Match Group’s other businesses. For now, POF, Match, and OkCupid are still going strong.
One solution that has been floated in the media is for Tinder to advertise other Match Group properties on its app. (Tinder’s revenue comes mainly from paid advertising, rather than its tiered service.)
For the most part, online daters are not beholden to one site or app, preferring to join two or more at any given time. Because of Tinder’s growth, it has grown the entire online dating industry in just three short years, and made online dating a more acceptable practice. Numerous dating apps are launching every week, hoping to cash in on Tinder’s market share and success.
It seems to be a win-win for the online dating industry as a whole, even in a saturated market.