In this segment from the Industry Focus: Tech podcast, Motley Fool analysts Dylan Lewis and Sarah Priestley give listeners a broad-stroke picture of just how huge the online dating market is, who the average user is, and how much the industry is expected to grow in the coming years.
A transcript follows the video.
This podcast was recorded on July 8, 2016.
Dylan Lewis: So we're talking about the online dating market today. I think it's a very interesting market. Some interesting stats, just to set us off, set some background here: Use of online dating sites or apps by 18- to 24-year-olds has tripled since 2013. Apparently, 15% of American adults have used online dating sites and apps, according to Pew Research. One in 10 American adults spends more than an hour a day on a dating app, according to Nielsen data. So there's clearly a lot of people using it.
I think any time you have this broad stroke interest in a category, naturally, investors are curious as to what's going on. So before we dive into one of the big companies involved in the space, do you want to paint a picture in terms of some industry numbers for the average users, and the size of this market?
Sarah Priestley: Sure. The industry is actually pretty large. There doesn't seem to be much analyst opinion on the industry so far, but we'll go in to talk about that later, because I think it's because people haven't been able to play the industry so well. It's actually valued at about $2.2 billion in revenue per year. The growth for the past five years has been 5% compound annual growth rate, and despite the fact that some people are saying the industry is growing down, it's actually expected to grow by $100 million per year for the next five years. So it has scope to grow. Also, China is estimated to be worth $1.6 billion by the end of this year. They're getting massively into Tinder particularly, and other online dating. And the market segment is mostly dominated by the 25- to 34-year-old category, at 33%, closely followed by 35- to 44-year-olds. So it's actually not the younger people who you would expect to be dominating the market, although they certainly are active in it.
Lewis: And the biggest player, the biggest fish in this pond, is [Match Group] (MTCH +0.00%). They control 25% of all online dating services by market share. That is more than twice the next largest competitor, which is eHarmony, which is just under 12%. And then no one else in the space occupies more than 5%.
Priestley: Yeah! And there's actually an industry magazine, it's called Online Dating Magazine, and they pose it that there are, worldwide, 8,000 online dating websites and apps created every year, and only 1% of these are successful. So that just shows you the amount of people that are jumping on this bandwagon.
