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Dating apps have hit a wall. Can these online apps turn things around?

The firms generate bulk of revenue by selling subscriptions, with smaller income streams from advertising. But they're struggling to grow those sales

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NYT

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J Edward Moreno

As online dating became as easy as swiping a finger across your phone screen, the companies who own apps like Tinder and Bumble became Wall Street darlings. But about a decade later, those platforms are now struggling to live up to expectations, and investors have grown frustrated and eager for something new.
 
Match Group and Bumble — which make up nearly the entire industry by market share — have lost more than $40 billion in market value since 2021. Even in an age when the apps are a staple on people’s smartphones, the two companies are laying off workers and reporting lackluster revenue growth.
 
 
Both companies have recently brought on leaders who have vowed to experiment with new features, hoping to capture the growth investors crave. But they face one critical obstacle: Not enough young people are willing to pay for subscriptions to dating apps — partly because younger daters are increasingly looking to platforms like Snapchat and TikTok to make connections — and it’s not clear what will change that.

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Match Group and Bumble generate the bulk of their revenue — about $4.2 billion for both companies last year — by selling subscriptions, with smaller income streams from advertising. But they’re struggling to grow those sales. Match Group was able to keep revenues steady last year only by raising its prices.
 
As far as investors are concerned, the businesses need to convince more young users to pay. “Wall Street loves subscription models because it gives them the comfort of recurring revenues,” said Youssef Squali, an analyst at Truist Securities. By paying, users can unlock features like unlimited swipes and the ability to see who has swiped on them. But for many people, that’s not enough: Unlike other paid subscription services, like Spotify or Netflix, dating apps can’t guarantee that you’ll find what you’re looking for.
 
In the United States, 30 per cent of adults, and over half of adults under 30, use dating apps, according to a survey by Pew Research Center that was released last year.  Millennials, the nation’s largest generation, were prime dating age when Tinder first rolled out, but more and more of them have married in recent years, a decision that usually results in people quitting the apps. Now the primary users are from Gen Z, a younger — and smaller — demographic with less disposable income. That generational shift poses a challenge for the dating app industry.


©2024 The New York Times News Service

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First Published: Mar 13 2024 | 11:15 PM IST

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