Lockdown, Not Knockdown: #5 Dating Apps

Digital Industries Booming in The Covid Era

Read my other articles in this series:?#1 ,?#2 ,?#3 , and #4 .

Can you name your favorite activity of March 2020, just when the pandemic hit? There is a high possibility that the answer is one of the following: a) hoarding toilet paper for at least two generations to come, b) attempting to bake sourdough, c) throwing out your failed attempt of sourdough and ordering takeout (read my most recent article on food delivery apps here ) or d) swiping on dating apps like there was no tomorrow, because, as far as you were concerned, maybe there was none indeed.

In the spring of 2020, due to mandatory social distancing, as well as the mysterious virus that was spreading at an unprecedented pace, many single people, particularly those living alone, found themselves agonizing. How can you meet anyone remotely interesting if you are not allowed to leave the house? It was only natural to turn to dating apps.

And the users obliged. On a single day in March 2020, Tinder, arguably the most famous of the dating apps, hit a record of 3 billion daily swipes (yes, daily). Another app, OkCupid, saw a gigantic 700% increase in dates (virtual ones, of course) between March and May 2020, and Bumble, Tinder's most significant competitor, recorded a 70% increase in video calls. Needless to say, this dating frenzy had a very auspicious effect on the bottom line of all these companies. For example, Bumble went public in 2020, and its founder became one of the few self-made women billionaires .

In this article, I investigate how the pandemic propelled the dating apps into vertiginous growth plus their most lucrative era ever, and I look into what's next for online dating after the pandemic is over. The app proponents will argue that the latter helped lonely people connect amid the gloom and despair of 2020 (even if the connections did not necessarily last ), while skeptics will retort that the dating apps mostly just cashed in on their users' solitude.

The Business of Love Algorithms

Over the previous six years, the online dating market has almost doubled, from US$1.69 billion in 2015 to the $3.2 billion giant that it is today. 2020 and 2021 have certainly accelerated that growth in all geographies. The global users of online dating apps are estimated at 370 million, up from 297 million in 2019. The three largest markets are the United States, China, and India. Have you ever wondered where and when it all started?

Similar to modern social networking (aka Facebook), pre-Internet computer-based matchmaking was born in a college setting in California. As early as 1959, in a class project at Stanford, two students matched 49 men with 49 women using one of the first computers, IBM 650 - those that took up an entire room. Harvard and MIT followed with their own matching experiments, as did different religious groups (Christians, Muslims, Jews, and Hindus). Not long after, the first businesses of this type were born, including video dating, telephone dating, and - wait for it - mail-order bride catalogs. (You can probably tell I had fun researching this article).

Enter the 1990s, and with them, the Internet and the very first online dating site, aptly named Kiss.com (1994). Match.com , still around today, was launched in 1995 while eHarmony, another dinosaur of online dating, started in 2000. At the turn of the century, the general idea was that online dating would be conducive to long-term relationships and marriages.

In the early 2000s, with the advent of Facebook, several newly launched online dating sites such as PlentyOfFish (2003), OkCupid (2004), and Badoo (2006) expanded their scope to social networking. Moreover, the first dating sites that were considered niche those days (e.g. focusing on gay people, singles over 50, and religious groups) saw the light of the day. Given the relatively simple business model, low entry barriers at the time, and the dot-com revolution, the online dating market swiftly became crowded. It didn't take long, as it usually happens in an oversaturated market, until the larger players started buying out small ones. Consequently, over the previous two decades, we saw meteoric growth of three tech and media conglomerates: Match Group , Spark Networks , and The Meet Group .

Match Group is the behemoth of online dating. The Dallas-based company started with the above-mentioned Match.com website in 1995, but now owns more than 20 online dating sites including OkCupid, PlentyOfFish, Hinge, and Tinder, and is present in more than 50 countries. Match Group's stock has been publicly traded since 2015.

Spark Networks originated in Beverly Hills in 1997, but later on moved to Berlin, Germany. The company is public and present in 29 countries, making it the second-largest dating conglomerate. Spark owns sites such as Zoosk, SilverSingles, EliteSingles, Jdate, and Christian Mingle.

The Meet Group was born in 2005. Its headquarters are located in New Hope, Pennsylvania. Its portfolio of sites includes MeetMe, hi5, LOVOO, Growlr, Skout, and Tagged. While the freemium model and advertising are the main sources of income for all dating applications, in-app purchases are also growing in importance. On Tinder and similar apps, in-app purchases mean you can buy the right to see who likes you, boost your profile to the top, or increase your chances of finding the right match. The Meet Group has gone a step further and introduced virtual gifts that users can purchase and send to each other.

You Can Always Swipe Elsewhere...Or Can You?

While Match.com was the pioneer of online dating, the website (and later, the app) does not enjoy tremendous popularity among the younger population. They view it as antiquated, and many critics will remark in addition that it is not particularly gay/queer/trans-friendly. Out of these unmet market needs, new businesses were born.

In 2006, Russian entrepreneur Andrey Andreev founded Badoo. The app has been a success in various European countries (e.g. Russia, Italy, Spain, and France) and Latin America (Brazil and Mexico). Initially, Badoo was a social networking app, but after clashing with Facebook, it decided to focus solely on casual dating, much like Tinder. Badoo, present in 190 countries, is the second-most downloaded dating app in Europe but has never enjoyed much success in the US.

Tinder is number one globally, both in terms of revenue and users. The app was launched in 2012 in a startup incubator as a joint venture between two media/tech companies. In contrast to Match.com and, at that point, everybody else, Tinder's focus has not been on lasting relationships, but rather on hookups. This attracted a large younger audience. As of 2021, Tinder has 66 million users , 6.7 million thereof being paying customers. In 2020, the company recorded a revenue of US$1.4 billion.

The history of how Tinder's greatest competitor, Bumble, came to be, is well known by now. In case you missed it: Whitney Wolfe Herd, one of the original Tinder crew, accused one of her coworkers of sexual harassment and left. Shortly thereafter, in 2014, Wolfe Herd got in touch with Andrey Andreev of Badoo. Andreev convinced Wolfe Herd to create another dating app, but with a twist - the app would be the first 'feminist dating app', where only women could make the first move. This year, Bumble has 42 million users (2.4 million are subscribers) and the company's 2020 revenue was $582 million. Initially, MagicLab was the parent company of both Bumble and Badoo but in 2020 it was replaced by Bumble Inc. Moreover, in February 2021, Bumble stock was listed on the Nasdaq Stock Market in New York, catapulting Wolfe Herd to billionaire status.

All this being said, the saturation with the trend of hookup culture was on the rise even pre-pandemic. Tinder, OkCupid, Badoo, as well as apps focusing on the gay population, such as Grindr or Scruff, have all been used predominantly for casual encounters. Younger people looking for stable and/or monogamous relationships all of a sudden became a minority.

Hinge was born in response: an app 'designed to be deleted', as the company advertises it. Essentially, Hinge, which is currently a huge success in the US and the UK, is the opposite of Tinder: it does not want you to swipe for good. Rather, it wants you to find 'the one' - just like the app creator did. If you have seen the Amazon Prime miniseries Modern Love , you will remember an episode with Dev Patel as a hopelessly-in-love character who has achieved worldly success, yet all he really wants is to get back together with his ex-girlfriend. The story, as all Modern Love stories, is based on real events. It portrays and romanticizes the story of the Hinge founder, Justin McLeod. Hinge is still catching up with its competitors, but it is worth noting that as of 2018, the company belongs to the portfolio of Match Group - ironically, the same company that owns Tinder.

The Future of Online Dating

The online dating app world is, indeed, an oligopoly. The market is controlled by a small number of conglomerates whose portfolios of dating apps cover all geographies, niches, and preferences. It is therefore difficult for new competitors to pursue meaningful market shares. In addition, due to the network effect , the value of established platforms seems out of reach because they have already secured a respectable number of users.

The pandemic has only solidified, if not intensified, this setup. That being said, it is important to underline that the market, like every other one in Covid times, has also had to adapt significantly. Video chats were introduced in early 2020, and have become the norm of any serious dating app since. Even when the pandemic is over, it is expected that video dating will remain the modus operandi for screening matches before actually deciding to meet any of them in person.

Research done by OkCupid is indicative of this tendency: 31% of around 70,000 survey participants reported that they liked engaging in virtual activities, 29% wanted to get virtual dinner or drinks, 25% preferred video chat over meeting in person and 15% wanted to watch a movie or TV together online. Reasons why they prefer meeting and hanging out with people online: it is less pressure, it is less important what you wear and ultimately you get to know the person better.

A whopping 85% contended that emotional connection should precede the physical one - a data point that the post-pandemic dating apps will definitely bear in mind. After all, it may as well be that the person whose profile you liked does not really exist . Moreover, according to Pew Research Center , 65% of women and 50% of men who participated in their study reported some sort of sexual harassment while trying to date online. Safe environments in a broader sense (essentially, boundaries ) are the utmost requirement for online dating post-Covid. After all, in 2021, 'I'm vaccinated' is trending as a pickup line .