Will Facebook Dating Break Tinder’s Heart?

Will Facebook Dating Break Tinder’s Heart? – Match Group (NASDAQ: MTCH), Tinder’s parent company, fell this week after Facebook (NASDAQ: F.B.) unveiled the latest Facebook Dating app in the United States. The feature will be available as a new tab in the Facebook app and enable users over the age of 18 to build a separate dating profile.

Users are not immediately linked to their Facebook friends when they use Facebook Dating. Instead, it allows users to choose from “friends of friends” or users outside their Facebook circles. Users interested in their Facebook and Instagram friends can use a “hidden crush” feature that only matches users who like each other back, similar to Tinder’s matching swipes scheme.

Users will be able to incorporate individual Instagram posts into their dating profiles at first. They will be able to integrate Facebook and Instagram Stories by the end of the year. Unlike Tinder, which makes most of its money from subscriptions, Facebook Dating is a private, ad-free experience.

Match investors should not be shocked by Facebook Dating, which was revealed at the company’s F8 conference last May and has already gone live in 19 other countries. However, the platform’s huge audience, integration with Instagram, and lack of subscription fees all point to it being a thorn on Match’s side.

Why Facebook is going after tinder

Last quarter, Facebook’s cumulative monthly active users (MAUs) increased by 8% year on year to 2.41 billion. However, due to market saturation and a string of privacy and security blunders, its total MAUs in the United States and Canada increased by only 1% to 244 million.

This is concerning because its consumers in the United States and Canada accounted for approximately half of its overall sales during the quarter. Facebook has relied heavily on Instagram’s growth to compensate for this weakness.

According to eMarketer, Instagram had 105 million MAUs in the United States last year, and 35 percent of U.S. teenagers ranked it as their favorite social networking app in Piper Jaffray’s twice-yearly Taking Stock of Teens survey.

Snap’s Snapchat came first in that survey with a 41 percent share, while Facebook and Twitter tied for third place with 6 percent shares each. Furthermore, 75% of Instagram’s users are between 18 and 24, which overlaps with a significant portion of Tinder’s core audience.

Read also: How To Use Bumble Without Facebook Account [in 2021]

Meanwhile, Match is spreading rapidly across the world. Its dating app family, led by Tinder, increased its user base by 18% year to 9.1 million in the fourth quarter. Tinder’s overall number of subscribers rose by 41% to 5.2 million, with more than 70% of users now locked into its Gold tier, which costs $15 a month for premium search and visibility features.

Facebook likely noted Match’s growth rates, but its overall subscriber base was still small compared to Facebook’s MAUs. It probably realized at that point that it could use its massive audience of Facebook and Instagram users to launch a competing dating site – and that it could afford to provide the service for free.

Facebook is targeting Match’s soft spots

Unlike Match, Facebook derives the majority of its revenue from online advertisements. It claimed that its Dating tab would remain ad-free, but the data gathered from those interactions would enable it to build more targeted advertising on Facebook and Instagram.

The new Dating feature could make Facebook’s environment more attractive to U.S. users, attract new users, and increase the average time spent on the app, which could boost ad revenue in the area. Furthermore, Match’s ambitions for international expansion could be hampered by Facebook’s development of the site to other nations.

Last year, foreign markets accounted for approximately half of Match’s sales. It does not break down its revenue by region, but it claims that Tinder is the most popular dating app in Japan and that OkCupid, its second-largest app, is the market leader in India. Tinder Lite, a lightweight version of the app that uses fewer data and battery power, was also recently released in Southeast Asia.

Facebook’s Asia-Pacific and Rest of World regions (which accounted for 74% of total MAUs last quarter) are both growing at a much faster rate than its markets in the United States, Canada, and Europe. Facebook, like Match, provides a lightweight version of Facebook called Facebook Lite for emerging markets.

It has already introduced its Dating feature in many Latin American and Southeast Asian markets, and it expects to launch it in Europe in early 2020. This growth could trigger problems for Match because price-sensitive users in lower-income markets might be attracted to Facebook’s free service rather than Tinder’s subscription fees.

Match investors shouldn’t panic … yet

Facebook has many benefits, but Match has a first-mover advantage in the industry. Users may be discouraged from filling out dating profiles due to Facebook’s recent privacy scandals, and many users are likely to prefer keeping their dating links entirely separate from Facebook – even though Facebook Dating attempts to keep them in separate silos.

The service could also struggle to compete with Tinder for the same reasons that Facebook’s job-posting platform worked to dethrone LinkedIn. The latter had a first-mover advantage, and its consumers were averse to mixing their social and professional lives. Many Tinder users probably think the same thing, so Match investors shouldn’t panic and run for the hills just yet.

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