A common question that many investors ask these days, "Why VCs should invest in dating?" brought out some strong reactions: “All dating is practically dead”, “There nuclear family is in crisis”, “There is no future in dating”.
These are some of the more cynical comments that I have received. I noticed that many of them come from disgruntled millennials, as well as from older age groups. In my opinion, this is the reason why, despite seeing growth in the dating industry, individuals within my own age group (I am approaching 30) do not see a future in online dating.
Dating is something that will always continue to progress since it is typically carried out by young people, usually within the ages 18-28 (this is considered the optimal age bracket, but not exclusive). I am convinced that entrepreneurs need to look ahead at least 3-5 years in advance. This is why, for the second part of my article, I want to talk about the latest event that has altered the future of dating, that being the coronavirus epidemic.
How COVID-19 impacted online dating?
The spread of coronavirus has brought on a new reality, where all social interactions have now gone online. In the West (and more specifically, the US) this has resulted in public confusion. All of a sudden, people who haven’t been dating before are now opening up online dating accounts. Hesam Hosseini, CEO of Match.com, has said that there are many singles out there who are asking tons of questions and are trying to maneuver in the online dating sphere. Match.com has even opened up a hotline for singles who are having a hard time understanding the “rules” of online dating.
In the US, many of those who have started online dating have previously used speed dating services, or have attended theme-based dating events (according to American researchers, this piece of the market brings about 2.5% of the total revenue of services dating). In addition, online dating has attracted those who are now unable to bear the burdens of family life and are currently in the middle of divorce proceedings. Specialists say that the conditions for divorce have become more favorable as a result of the COVID outbreak. Law firms have seen divorce cases spike by up to 30-45%.
From Casual Hook-ups to Real Emotional Bonds
The phenomena listed above have helped generate a surge of activity in dating services. Match Group reported a 20% increase in the number of Tinder chats. Overall, the usage of other Match Group dating apps has gone up by 30% during the month of March.
Not only has the rate of activity increased, but the users’ expectations have changed as well. COVID-19 has caused a drop in casual hook-ups. When everyone is sitting at home in an effort to combat the spread of the virus, casual hook-ups have become less feasible. This is all compounded by collective frustration over recent global events. As a result, users are now looking for meaningful, long-term relationships. OKCupid has noted that the number of its users who are looking for long-term relationships has increased by 5%, in contrast to a 20% drop among those who are looking for casual relationships. This is largely due to the fact that loneliness can breed anxiety and boredom. In need of an outlet, singles go to dating services in search of companionship and friends.
To satisfy the needs of such users, Tinder, for example, went on to make the "Passport" feature free (it allows one to search for a partner outside their country). Thus, people who were thousands of miles apart could become a couple. In my opinion, this is not a good way of finding your partner, since Tinder’s match lists are often full of people with whom the opportunity to meet in person is negligible. Nevertheless, this is a clear step away from the “casual” approach taken up by most dating apps.
Ask on a Virtual Date
One major trend that has dominated the COVID-era is video calling. The Meet Group, which owns MeetMe (an application used for video calls and streaming), has shown rapid growth during the pandemic. According to the data service, Prioridata, there were about 2.9 million monthly active users in April (a 31.4% increase from March), and about 593,000 daily active users (a 40.5% increase from March). Revenues have actually gone up by almost 76.4% - and this is just from the AppStore.
Other services were forced to change their direction to accommodate for video calling (we have done so for our own application, KeYou). Before the pandemic, video chatting applications were not a priority for the Tinder product team. Only 6% of users were interested in this feature. During the coronavirus outbreak, this number increased to 69%.
The very idea of video dating began to take off. In a questionnaire to its users, OKCupid asked what they would like to see in an ideal virtual date. More than a million people responded with comments like: “creating a joint playlist”, “solving a crossword puzzle”, “watching a Youtube concert”, “painting each other”, “watching TikTok”, etc.
The Future of Virtual Dating
Whatever happens to “video dating” in the future, one thing is certain, and that is that people who are looking for a date are now more accustomed to video calls and will continue to use them.
In general, virtual dating has been used in order to establish long-term relationships. 85% out of 70,000 OKCupid users said that they want to establish an emotional attachment prior to meeting in person. There are also fewer distractions at home, which gives users the opportunity to get to know each other better. This leads to users developing deeper connections with their dates. A video call, therefore, becomes the intermediate step between text messaging and an in-person meeting.
There are over 8,000 dating sites out there. Many of them are still so stuck in the past that they will have a hard time adapting to the new reality. This means that the market will eventually shrink, as older market players become usurped by newer, more innovative competitors.
With the rise of video calling, cybersecurity issues have also come to the forefront. Virtual dating information is highly sensitive and a leak could lead to serious consequences. Perhaps this is one of the reasons why the market was not intimidated by the entry of Facebook into the online dating market. After the Cambridge Analytica scandal, users have become more cautious and will think twice before they trust an IT giant with their privacy. Moreover, the Match Group receives 95% of its revenue through paid subscriptions, compared to FaceBook which gets it through advertising and data sales. Users will most likely opt for security.
In conclusion, I would like to note that dating has begun to percolate in the social media and entertainment categories. That is why we have created a new concept - Datertainment. From the past to nowadays the approach has radically changed. Previously, users signed up dating apps to find a partner and then find ways to entertain each other. Today, they join dating for entertainment and match other people through it.
All of this creates new opportunities for the implementation of novel and ambitious ideas. I am certain that we are experiencing a rebirth in dating and those investors who see this will be able to find their unicorn in the dating industry.
Oleg Gervalov, COO, co-founder of KeYou