Analyst Nathan Feather discusses why the online dating
market is slowing down, and whether or not it can get back on
track.
----- Transcript -----
Welcome to Thoughts on the Market. I’m Nathan Feather, Morgan
Stanley’s Online Dating and US Small- and Mid-Cap eCommerce
Analyst.
Today, people across America are casting their votes. On this
podcast, however, we're taking a break from our election
coverage. And taking a leap into a different matter on many minds
… and hearts. Online dating. Why it fell out of favor and how it
might make a comeback.
It’s November 5, at 10am in New York.
Finding love is a tricky business. Dating has never been easy;
but with an epidemic of loneliness and isolation, singles today
are finding it harder than ever.
For those looking for love, online dating seems to offer endless
possibilities. Since its inception just three decades ago, the
stigma around online dating has faded, leading more and more
daters to put their faith – and money – into the algorithm. In
the US, three out of four actively dating singles have used it at
some point in their journey.
But after years of consistent double-digit growth, the online
dating market is now faltering, with US industry revenue growing
just 1 per cent this year.
Why? Well, we think the issue lies primarily in weakening user
trends with the US user bases of major dating apps in
decline. Since last spring, we have seen around a 15 per
cent decrease in dating app use by singles actively looking for a
relationship. To us this indicates that the product is not
matching user expectations as some daters have grown tired of the
persistent swiping and dead ends. Consequently, daters'
intentions to use online dating in the future have consistently
declined.
Now, there are many theories about why this is happening. We
think there may be residual impact from the pandemic when singles
used online dating at record rates. People who found
relationships during that time likely left the apps. And those
who didn't find a partner also often left the apps, disappointed
and less likely to return. But that’s not all; while Millennials
embraced the fun and casual experience of swipe apps, Gen Z isn’t
so enamored – instead searching for greater authenticity.
So, can online dating be fixed or are these issues beyond repair?
Well, there are two main schools of thought. The first believes
that the issue with online dating is a lack of innovation, and an
improved product should lead to improved financials. The second
camp argues that daters are fundamentally shifting away from
these products to date in person or not at all.
We sit firmly in the first camp and think this is a product
issue. The apps need to do a better job helping people find
lasting relationships. Granted, fixing this is far easier said
than done. Human relationships are messy and complicated. But we
do think there are clear opportunities. Many of the large apps
have stayed relatively unchanged over the past five to 10 years
and are meeting the demands of users from then – and not now.
With improvements to the user experience and better tailoring to
the goals of today’s daters, we believe the apps can reaccelerate
user growth. In fact, brands that have consistently improved the
user experience have recently fared far better.
With that being said, we do think it will take time to find the
product improvements that really work and convince daters to give
the apps another shot. But as products evolve, we think daters
and investors can rekindle their relationship with online dating.
If you enjoy the show, please leave us a review wherever you
listen and share Thoughts on the Market today, with a friend,
colleague, significant other -- even a situationship. Thanks for
listening.
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