Matchmaking is among the world’s oldest professions, but today, online matchmaking has taken center stage. This article dives into the business of dating, analyzing the U.S. market size for dating apps, the industry’s leading players, and the revenue strategies these platforms employ (and whether they profit).
Key Highlights
- Market Size: The value of the online dating industry in the U.S. has grown to billions of dollars annually.
- User Demographics: While younger generations dominate the space, older adults are also becoming active participants.
- Biggest Players: Companies like Match Group and platforms like Tinder reign supreme in the space, but consolidation and competition continue.
- Business Models: From subscriptions to ads and in-app purchases, dating apps explore multiple avenues to make money while retaining users.
Market Size of Online Dating
In 2018, research estimated the U.S. dating services market to be worth $3 billion, with around 50 million Americans—15% of U.S. adults—using websites or apps to date. While popularity continues to increase, some sources anticipate a slowdown in growth past 2022, while others predict a 25% revenue increase by 2020.
Between 2013 and 2015 alone, the usage among young adults aged 18–24 tripled, according to Pew Research Center. This surge is fueled by factors such as millennials’ growing spending power, shifting life goals (e.g., delaying marriage and home-buying), busy work schedules, and greater cultural acceptance of online dating. Additionally, the rising penetration of broadband internet adds to the convenience of these platforms, attracting more users across the country.
Who’s Using Dating Apps?
While online dating may seem inherently tied to younger users, adults over 50 increasingly use these platforms. Between 2013 and 2015, the share of Americans aged 55–64 using online dating doubled from 6% to 12%. Moreover, research suggests one in every 10 American adults spends more than an hour daily swiping on dating apps.
What Are Users Looking For?
A diverse range of goals drives online dating. In a 2017 survey of 6,458 online daters from 30 countries, 48% reported searching for “fun,” though many apps now seek to balance casual and more meaningful connections. Meanwhile, MarketWatch notes online dating is the most common way for homosexual couples to meet and the second most popular for heterosexual couples (after being introduced through friends).
The Major Players: An Overview
Online dating platforms generally fall into two categories:
- Compatibility-based apps, like Match.com or OkCupid, where users complete personality assessments for curated matches.
- Swipe-based apps, such as Tinder or Bumble, which link to users’ social media accounts, prioritizing speed and convenience over in-depth profiles.
Tinder, for instance, revolutionized the market with its photo-driven interface and casual, swipe-based mechanism, generating 1.2 billion profile views daily. On the other hand, Match.com attracts users seeking committed relationships with its subscription pricing model. Bumble appeals to women by allowing only them to initiate conversations, cutting down on unwanted or inappropriate messages. Meanwhile, apps like The League serve a niche audience of highly-educated and ambitious professionals, limiting membership to those who meet specific criteria.
Dominance Through Consolidation: Match Group vs. Competitors
The U.S. online dating market is largely controlled by Match Group, which owns 45 brands, including Tinder, Match.com, and OkCupid. Holding nearly 25% of the market share, Match Group dwarfs its closest competitor, eHarmony, which holds a 12% share. Match’s dominant portfolio allows for cross-promotion between its platforms, ensuring user retention and engagement.
Tinder’s Success: Tinder’s success has cemented its place at the top of the casual dating spectrum. According to experts, newer apps struggle to compete without significant venture capital funding or a unique appeal, with many disappearing as quickly as they launch.
Challenges for Smaller Players
While niche apps for beard lovers, gluten-free singles, and clowns exist, scalability remains a challenge. The problem boils down to network effects: dating platforms are most valuable when they have plenty of active users. Platforms with low activity don’t attract return users, making it hard for newcomers to sustain growth.
Tech and VC Funding in Online Dating
Despite online dating’s popularity, venture capital (VC) has been cautious about the space. Between 2010 and 2015, VCs invested $150 million in dating startups, but monetization challenges and periodic user loyalty create obstacles. Startups often require heavy cash infusion for user acquisition through marketing, which smaller businesses struggle to secure.
Interestingly, some of the most successful platforms, such as Tinder and Match.com, were incubated by IAC, foregoing traditional VC investments. International funding trends also reveal that Chinese dating apps like Tantan and Blued are raising significant amounts, further expanding globally.
Facebook’s Entry into Online Dating
Facebook’s upcoming dating feature could significantly disrupt the market. Users will be able to create dating profiles leveraging Facebook’s wealth of user data, including mutual friends and interests, to deliver highly tailored matches. Expected to launch in late 2018, Facebook’s dating platform will be free, challenging Match.com and other paid services.
Impact on Competitors
Facebook’s move prompted Match’s stock to drop by 22%. CEO Amanda Ginsberg of Match has acknowledged Facebook as a competitor but expressed doubts regarding privacy concerns and user overlap. Regardless, Facebook’s validation of online dating could further legitimize the industry at large, sparking new innovations and scaling challenges within the market.
The Revenue Models of Dating Apps
Online dating companies rely on three main revenue streams: subscription models, freemium offerings, and ads.
- Subscription Plans: Older platforms like Match.com and eHarmony use this model, charging users fixed monthly fees for access. These platforms target a more mature demographic seeking serious connections. Subscriptions often become cheaper with long-term commitments—eHarmony, for example, charges $42.95 for six months, dropping to $10.95 for 24 months.
- Freemium Models: Apps such as Tinder and Bumble offer basic functionality for free, monetizing with premium features or ad placements. Tinder Gold, at $4.99/month, lets users see who has liked their profiles, while Tinder Plus ($9.99–$19.99/month) adds perks like unlimited swipes and geolocation adjustments.
- In-App Advertising: Advertising allows platforms to generate revenue on free tiers. For example, Tinder tested video ads with Budweiser, attracting user engagement with swipe-like mechanics. Creative campaigns, like the movie Ex Machina embedding its robotic lead character into the app, have also gone viral.
What’s Next for Online Dating?
The online dating industry has fundamentally reshaped relationships, with some arguing it has resulted in more diverse and stable marriages. However, the entrance of Facebook and the decline of niche apps could mark the end of casual swiping culture.
Dating apps that adapt quickly to changing user preferences, technology, and competition will continue thriving, while others face challenges of scaling, monetization, and user retention. Innovations in targeting and features will likely define the future of online dating, with relationships firmly seated at the intersection of tech and authenticity.