"Want to Date but Hate Spending Money"... Dating App Faces Dilemma

High Interest in 'Raensun Romance' but Slow Growth in Paid Service Spending
"Tinder and Bumble's Corporate Value Down 52 Trillion Won in 3 Years"

The dating applications (apps) that experienced rapid growth during the COVID-19 pandemic are now facing deep concerns. Although the number of users wanting to engage in 'online dating' continues to steadily increase, the slow growth in paid service usage makes it difficult to generate substantial revenue.

According to data.ai, a data analysis platform, spending on dating apps in South Korea was $9.767 million (approximately 12.8 billion KRW) in January this year, down 11.4% compared to the same period last year. On the other hand, the number of dating app downloads reached 1.187 million in January this year, an 8% increase from a year ago. Demand for using dating apps has increased, but spending on paid services has actually decreased. In South Korea, three companies dominate the market: the global company Tinder and the domestic apps Wippy and Glam. All three reportedly have over 100,000 monthly active users. Domestic companies also experienced significant growth from 2020 to 2022 during the COVID-19 pandemic.

The largest market for dating apps, the United States, is also showing stagnation in app spending. According to data.ai, global spending on dating apps was $504.908 million as of January this year, with 40% of that occurring in the U.S. The growth rate of dating app spending in the U.S. was 23.4% in January 2022 but dropped to 5.4% in January 2023 and 6.2% in January 2024, falling to single digits. According to a recent report by the Pew Research Center, 30% of American adults and more than half of adults under 30 use dating apps, but only one-third of them pay for and use premium services.

Dating apps generate revenue through paid subscription fees and advertising, but it has become increasingly difficult to make money.

NYT: "Dating Apps Have Not Succeeded in Convincing Users to Pay"

The New York Times (NYT) reported, "Dating apps have changed the way people date, but they have not succeeded in convincing young users to pay," adding that "Match Group (Tinder's parent company) and Bumble, which effectively cover the entire industry by market share, have lost more than $40 billion in market value since 2021." The article also noted, "When Match Group emerged in 2009 and Bumble in 2014, Wall Street showed great interest in the new revenue streams dating apps could create, but now those expectations have vanished." Bumble's current stock price is about one-quarter of its value at its 2021 IPO. Match Group's stock price soared to $169 in 2021 but now remains around the $30 range, about one-fifth of that peak."

Mandy Wang, a student at New York University, told the NYT, "There is a preference for meeting people in person or through Instagram or Snapchat direct messages (DMs)," adding, "I know people who use dating apps, but I have never seen anyone pay for them, and if someone does pay, I think they would be considered foolish."

Due to this atmosphere, both companies have seen their revenue growth slow over several years and have recently laid off employees as part of cost-cutting measures. Dating app companies have launched major overhauls to secure paying users. They are trying to understand the demands of Generation Z, their core user base, and find ways to open consumers' wallets. Global dating app companies like Tinder and Bumble have even changed their CEOs recently to drive innovation.

The market's response to the success potential of these innovations is mixed. Zach Morissey, an analyst at Wall Street investment firm Wolfe Research, said, "The dating app sector has seen relatively little product innovation in recent years," adding, "There is no clear solution in sight to solve the problems." Ken Karelski, an analyst at another investment firm, Wells Fargo, said, "Dating, and love in general, is a fundamental human activity. Therefore, it is hard to expect major physical changes," but added, "Nevertheless, how we date and find partners is a topic worth discussing."