Newspaper article International New York Times

IAC Embraces Dating Sites despite Online Crush

Newspaper article International New York Times

IAC Embraces Dating Sites despite Online Crush

Article excerpt

IAC/InterActiveCorp, owner of Match.com, OkCupid and other sites, has been increasing its presence in the field.

CORRECTIONS APPENDED

IAC/InterActiveCorp has always had a thing for online dating. But now things are getting really serious.

The media conglomerate, which is owned by Barry Diller, has been snatching up dating sites for the last several years, increasing its bet on the fertile terrain combining technology and romance, where many couples are meeting these days. Through its two giant dating sites, Match.com and OkCupid, IAC was already the largest player in the online dating market when it announced last December that it was consolidating those sites along with its other smaller dating site holdings into one division, the Match Group.

Then in March, IAC increased its majority stake in Tinder, a mobile app that is ground zero for the hookup culture, paying an undisclosed amount that is believed to have valued Tinder in the billions. Then, in July, it acquired most of HowAboutWe, a Brooklyn- based dating site, further adding to its collection of "personals" brands that include Chemistry.com and Meetic.

IAC is organized in an unusual way. Less a traditional media company than a conjoined set of loosely affiliated Internet outfits, IAC also owns companies in the search, e-commerce, video and media industries. But over the last decade, it has systematically bought its way into the dating market, which Mr. Diller saw as a lucrative opportunity for an online business long before many others. As of the end of last year, IAC said it hosted 30 million active users among its dating properties, 3.4 million of which are regular paid subscribers. The Match Group is now responsible for about a quarter of IAC's total revenue.

"We are not just the acquirer of choice," said Sam Yagan, chief executive of the Match Group, "we are the only acquirer." But if IAC seems cocky, investors seem nervous. They have been pushing for IAC to spin off the Match Group as soon as possible, probably because they think the popularity of dating sites is about to crest.

"We are not seeing a bubble as such, but growth is going to slow," says Jeremy Edwards, an analyst with IBISWorld, a market research firm.

The online dating industry is trying to navigate a delicate balance. On one hand, it has never had stronger market penetration in the United States or abroad. However, it is under intense pressure as free mobile services pop up and make it more challenging to generate a profit.

About one of every 10 American adults has used a dating website or mobile app, according to a 2013 report from Pew Research. And, according to a study published in the Proceedings of the National Academy of Sciences last year, about 35 percent of couples who married from 2005 to 2012 met online.

"People don't see the sort of stigma attached to it the way they did 10 years ago," said Aaron Smith, a senior researcher with the Pew Internet and American Life Project. "They're seeing their friends and family members use it."

In 2013, consumers paid $2.2 billion worldwide to find a mate, according to IBISWorld, and the overall market is expected to continue to grow at about 5 percent a year over the next five years. Yet those big numbers belie the underlying concerns, industry experts say. Dating through mobile is exploding and now accounts for roughly 27 percent of the dating site services, but it has remained a persistently weak spot for much of the industry.

Neil Clark Warren, chief executive and one of the founders of eHarmony, said his site had tripled its mobile audience in recent years and that it now produced 52 percent of its business, yet he acknowledges it has been a challenge for the company financially. …

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