IAC / InterActiveCorp has always had a soft spot for online dating. But now things are getting really serious.
The media conglomerate, whose president is Barry Diller, has taken over dating sites for several years, multiplying its bet on the fertile ground combining technology and romance, where many couples find themselves today. Through its two giant dating sites, Match.com and Ok Cupid, IAC was already the largest player in the online dating market when it announced last December that it was consolidating these sites and its other smaller dating sites into a single division, the Match Group.
Then, in March, IAC increased its majority stake in Tinder, a mobile application that is the basis of the culture of the connection, paying an undisclosed amount that would have valued Tinder by the billions. Then, in July, she acquired most of the About Us, a Brooklyn-based dating site, adding to its collection of “personal” brands that include Chemistry.com and Meetic.
IAC is organized in an unusual way. Less a traditional media company than a joint collection of loosely affiliated Internet companies, IAC also owns companies in the research, e-commerce, video, and media industries. But over the past decade, he has consistently bought his place in the dating market, which Mr. Diller saw as a lucrative opportunity for an online business long before many others. At the end of last year, IAC said it had hosted 30 million active users among its dating properties, including 3.4 million regular paying subscribers. The Match Group is now responsible for around a quarter of IAC’s overall turnover.
“We are not just the buyer of choice,” said Sam Yagan, Managing Director of Match Group, “we are the sole buyer”. But if IAC seems arrogant, investors seem nervous. They have been pushing for IAC to separate from the Match Group as soon as possible, possibly because they believe the popularity of dating sites is about to skyrocket.
“We don’t see a bubble as such, but growth will slow down,” said Jeremy Edwards, analyst at IBIS World, a market research firm.
The online dating industry is trying to strike a delicate balance. On the one hand, it has never had a stronger market penetration in the United States or abroad. However, it is under intense pressure as free mobile services emerge and make it harder to generate profits.
About one in 10 American adults has used a dating site or mobile app, according to a 2013 report from Pew Research. And, according to a published study in the Proceedings of the National Academy of Sciences last year, about 35 percent of couples married from 2005 to 2012 met online.
“People don’t see the kind of stigma attached to it like they did 10 years ago,” said Aaron Smith, senior researcher at the Pew Internet & American Life Project. “They see their friends and family using it.”
In 2013, consumers paid $ 2.2 billion worldwide to find a partner, according to IBIS World, and the global market is expected to continue to grow at around 5% per year over the next five years. Still, those big numbers belie the underlying concerns, according to industry experts. Mobile dating is exploding and now accounts for around 27% of dating services, but it has been a persistent weak spot for much of the industry.
Neil Clark Warren, Managing Director and Co-Founder of eHarmony, said his site has tripled its mobile audience in recent years and now produces 52% of its business, but acknowledges this has been a financial challenge for the company. “How do we get these people to subscribe once they sign up?” ” he asks.
Another problem is that the market has become crowded. In recent years, a range of niche sites have emerged, including Gluten FreeSingles, Trek Passions, Captain’s Date, DateMyAnimal and even The Atlasphere, for the followers of the libertarian philosophy of Ayn Rand. While these websites often have a short lifespan, they are increasingly turning singles away from the larger, more general sites. Additionally, increased competition for subscribers has increased advertising costs for most sites.
Most new sites are free, eschewing a subscription model to build a user base instead. And for many social media users, sites like Facebook and Instagram service as a de facto dating site, eliminating the need to pay for dating services.
Match’s competitors, like eHarmony and the popular mobile app Zoosk, which goes public this year, has come to rely on so-called freemium models, which have spread throughout the online dating industry. For example, while both sites are free, Zoosk has been successful in getting customers to pay more for things like appearing higher on a search list or finding out if someone you interviewed just hasn’t seen. your message or ignore it. you. EHarmony has developed a dating coach service that costs $ 5,000.
Tinder, IAC’s fast growing app, has been hesitant to charge members anything because it doesn’t want to slow growth. Nonetheless, Match Group chairman Gregory R. Blatt told investors the company would soon find a way to capitalize on the app’s popularity. On a conference call with analysts in July, he said the company speculates that Tinder could potentially earn $ 75 million a year in earnings before interest, taxes, depreciation and amortization. But the Match Group as a whole, by comparison, generated $ 788 million in revenue last year, or about a quarter of IAC’s $ 3 billion in 2013 revenue. Still, IAC acknowledged that the ad will be part of any formula that allows Tinder to make a lot of money; even so, other brands have only had limited success with advertisements.
Mr. Yagan is not worried. He points out that Tinder is the first dating site to rank in the top five in the past decade. When it comes to increased competition, with a constant flow of new players like HingeMr. Yagan said there was still a lot of business to be done.
“It’s not a winner who takes all the momentum,” he said. “There are a lot of simultaneous uses. Unlike a car, the majority of online daters use multiple products, so you want to have a portfolio – a multi-brand approach.