Why investors are super-liking the online dating industry

No… no… no…ooh! Yes! Young people, in particular, spend a lot of their time aimlessly swiping through faces of eligible (or ineligible) bachelors/bachelorettes in their local area. Yet, many do not realise that the online dating industry will be worth $12 billion by 2020 and is seen as the next big thing by investors. Research by Wall Street indicates that as many as 20% of all internet users will be using dating products by 2020.

The reason for the boom in the dating industry is simple. The internet has transformed the way people operate in their everyday lives; one of the most notable changes being the way we communicate. As a result, the internet has had profound effects on some of the biggest social decisions that people make, such as choosing a mate.

In America, more than a third of marriages start online, and it is the second most popular way to meet people

Smartphones have put social clubs, bars and pubs into our pockets, enabling people to mingle freely without the constraints of geography, time or money. Before the popularity of the internet, meeting someone online was not the norm and was often seen as strange or unusual. Nowadays, the ease of online dating apps and the wider pool of singletons have enticed at least 200m people globally. In America, more than a third of marriages start online, and it is the second most popular way to meet people.

The increased willingness of internet users to try out online dating is a big contributor to why the market is growing. According to Mark Kelley, an analyst at Nomura Instinet, “roughly half of internet users are single” and according to current trends, 15% of people globally used dating apps in 2015. If the pattern continues, they estimate that “20% of them will be willing to use online dating products by 2020”. As a result, investors are increasing their investment into the online dating industry, and particularly in Match Group which has seen its share prices rise rapidly since 2015.

Facebook has the largest network of single people in the world

The Match Group, which owns platforms such as Tinder, OKCupid, Hinge, Match.com and an entire host of other sites have seen stock prices rise by 28% at its highest at closing. The Match Group’s strategy is to buy its competitors before they begin to threaten the Match Group’s user base. Their policy of using acquisitions to remain competitive in their market has enabled them to cater to a diverse clientele without necessarily keeping up with innovation. Buying new ideas has reduced the worry of competitors in a market with low barriers to entry. More so, Facebook’s plans to jump on the bandwagon has excited researchers and investors in the market as they try to predict what the tech giant’s involvement could mean.

Facebook’s announcement about its foray into online dating saw its share price rise rapidly, at the detriment of the Match Group’s share prices. Facebook has the largest network of single people in the world. However, commentators have questioned whether Facebook will continue to force its monopolies into the world of dating. As Facebook already holds more data than any other platform and has also been involved in the Cambridge Analytica scandal, researchers at the open Market Initiative have called for regulators to break up the company. Facebook’s data hoards would give the company a ‘head start’ into the online dating market, especially as apps such as Tinder and Bumble allow access through Facebook.

As people seek to make snap judgements based on looks alone, negative emotions surrounding depression and body image arise within the digital meat market

The choice presented to users, as well as the mutual consent from both parties makes online dating both attractive for users and for investors who are anticipating higher growth in the market. The move from meeting ‘a friend of a friend’ to a stranger has engulfed the dating world as the swiping culture is taking hold. However, some argue that this has resulted in pickiness between people; women are far more likely to be pickier and reject a higher number of potential partners, rather than settle with a smaller number of suitors offline. As people seek to make snap judgements based on looks alone, negative emotions surrounding depression and body image arise within the digital meat market.

Despite this, many rely on algorithms to meet their mate, which allows a few companies to wield tremendous power. Yet the numbers of users is rising globally; by 2020, more than half of users will be outside the United States. Digital dating offers millions of singletons a faster and more efficient way to find a mate. Swiping culture is here to stay.