Online Dating – Q3 2021 Update – Match Group, Tinder & Bumble – 12 July 2021

Could you outline the state of the online dating industry and how it might evolve? People still call it online dating, but it seems so much has moved to mobile over the last couple of years. There are a handful of larger companies that people seem to know and many different properties.

Facebook Dating was launched in December 2019. I’ve heard that it has had mixed success at best and that it hasn’t gained much traction. Around the time of the launch a lot of people interested in the online dating category were squarely focused on it and the potential risks that it posed to companies such as Match Group. Why do you think there have been notable challenges to Facebook becoming successful in this category?

You suggested that the primary impediment to Facebook Dating gaining traction is that Facebook has historically been used for a different purpose – connecting with friends and family – and it is difficult for people to recalibrate to use it for online dating. You also indicated that you thought Instagram and the way people use it could be considered the biggest threat to a company such as Tinder if it were to focus on and invest in dating as a feature of the platform. Why do you think Instagram could gain traction here where Facebook Dating has struggled? Do you think it’s something the company should or will do?

You mentioned that part of the challenge of developing online dating features for platforms such as Facebook and Instagram is that people have historically used those apps for other purposes and don’t think of them as facilitators for dating. There are companies, however, who were once solely focused on online dating but now seem to be expanding into a whole host of areas, some related to the apps and others more branding efforts. Bumble is basically opening up a restaurant and has been thinking about not just dating, but relationships, whether it’s friendships or professional networking. How might this play out as some of these online dating companies broaden the notion of what they do and how might it impact their TAM? I have come across estimates of a TAM of about USD 5bn, which seems relatively small.

What are your thoughts on the USD 5bn that had been suggested to me as a TAM estimate for the online dating industry? How might that grow? I have read estimates indicating mid-single-digit to low-double-digit growth, driven perhaps by increasing monetisation efforts in more established markets and pursuing newer markets, especially overseas. To what extent could the category grow over the next 1-3 years?

I think people are interested in where growth will come from over the next 1-3 years, with a focus on more users, more engagement and greater ARPU in established markets. What international markets seem to be most appealing, which are either reaching inflection points or just scale where suddenly they contribute to key metrics?

You highlighted three tiers of providers or potential providers in the category. Match Group and Bumble are likely the established leaders as large publicly traded companies. How do you think those companies are positioned? I say companies because it can be confusing when there’s Match Group and Match.com and then Bumble the company and Bumble the property.

It seems you think Match Group and Bumble are focusing on or should be focused on increasing ARPU as well as the level of engagement or minutes that people are spending with their properties. How do you think they are doing this and how should they be?

You suggested that companies such as Match Group and Tinder want to be creative around factors such as new features, functionality and engagement. What else do you think could support or drive growth?

It seems that you are saying Tinder and perhaps by proxy the Match Group more broadly is being forced to be more creative to support and drive growth. YoY revenue growth for both Match Group and Bumble the company is expected to be around 20-25%. Would you agree that you seem to be highlighting more revenue growth challenges vs opportunities?

There seems to have been a revenue miss in Q4 2019 and then the last one prior to that was Q2 2016. Match Group’s record is very impressive and I think it’s one of the reasons why it is a company that people wouldn’t necessarily believe is a USD 40bn-45bn market cap company. There have been substantial changes in Match Group’s management team, including Shar Dubey replacing Mandy Ginsberg as CEO in 2020 and Jim Lanzone coming in as Tinder’s new CEO later in the year. I think there have been three different people in the chief product officer role since the beginning of 2019. What are your thoughts on these changes and their impact?

There have been wholesale changes at Match Group and Tinder over the past 12-18 months, but it does seem there has been a greater level of stability over the last 6-12 months. It’s an easy comparison and perhaps the new personal will end up staying for a while and can establish and push forward on their visions and strategies. Was it your expectation that there would be big changes with every new administration?

Live streaming seems to be a topic that people are focused on. Match Group spent USD 1.7bn to buy Hyperconnect, a Korea-based company that many in this category might not have been familiar with. Its focus is on streaming, with one app focused on one-to-one streaming and another focused on one-to-many streaming. How important do you think live streaming is? How might Match integrate or leverage Hyperconnect across its properties?

What is your outlook for the industry over the next 1-3 years? Could you suggest any properties that you think are worth monitoring as potential emerging competitors?