Investors Shouldn’t Be So Quick to Swipe Left on Tinder’s Owner – Facebook Plans to Start Dating Service By E. Winkler
The search for a soul mate has become a big business. In the U.S., one in three dates now begins online. The global market for online dating services—about 500 million people—is expected to reach 672 million by 2019, according to research by Jefferies.
The business has been lucrative for the biggest player, InterActiveCorp and its listed subsidiary, Match Group, which owns Tinder, OkCupid and Match .com.
That explains why shares of IAC and Match nose-dived 20% and 25%, respectively, when Mark Zuckerberg said Facebook would enter the dating scene.
… The conventional wisdom among investors is that Facebook can do to IAC and Match what it did to Snapchat when it began Instagram Stories. There certainly are risks, but Facebook has a tougher task in the dating game.
Facebook, like Snapchat, is all about sharing. But not everyone wants to share details of their love life, especially with friends and family on their news feed. (Facebook has promised to keep them separate.) Facebook also needs to win users’ trust – no minor feat given its recent privacy and date scandals.
There is already evidence to suggest users don’t like to mix Facebook and dating: Signing up for Tinder was initially only possible through a Facebook account. But two months after Tinder started offering an alternative, non-Faceobook sign-up, 75% of new users opted not to sign up through Facebook.
“Users quickly and decisively separated Facebook from their dating experience,” said Mandy Ginsberg, CEO of Match.
… The biggest risk of Match may be the erosion of its pricing power. On Tinder, users can swipe free of charge but they can also pay to “boost” their profile or “super-like” potential mates. Facebook has said its service will be free.
… Still, IAC has a huge headstart on Facebook, and it plans to use it.