Online-dating firm Match Group Inc. is giving users new features to woo each other via video call, providing the company with additional income streams as the coronavirus pandemic changes courtship behavior.
Dallas-based Match operates several dating apps, including Tinder, Hinge and OkCupid, as well as its namesake brand. The company in July completed its separation from IAC/InterActiveCorp., which previously owned a roughly 80% stake.
Match released video-chatting features for its apps in the spring as users started avoiding traditional dating spots such as bars and restaurants. The company is now in the beginning stages of developing features such as games and icebreakers to make those one-on-one video calls more engaging—part of a broader strategy to find new ways to generate revenue from its millions of users, according to Chief Financial Officer Gary Swidler.
“We’ve got a lot of users, and I think there’s more we can do with them,” said Mr. Swidler, who is also Match’s chief operating officer. “And ultimately there’s more we can charge them for by giving them more to do on the platform.”
Pricing at Match varies across apps and according to users’ locations and subscription durations. On some apps, such as Tinder and Hinge, users can create a profile and contact other users free, but are required to pay up for premium services, such as showing their profile to a larger group of users.
Tinder users in New York City pay between $15 and $30 monthly for a gold-level subscription, a premium account that offers recommendations for potential suitors as well as the ability for users to see who likes them before they make contact.
The company’s first-time subscribers increased about 15% between late February and the end of July, as users sought ways to date while staying at home. Average subscribers at Tinder, the company’s most popular app, grew 3% from the previous quarter to 6.2 million as of June 30.
“I think people thought this was the only avenue, and they didn’t want to give it up,” Mr. Swidler said. “So they were willing to engage with the products more, and in some cases pay for the product.”
Direct revenue at Match—a mix of subscription and one-time fees—rose 2% in the quarter ended June 30 from the previous quarter and 12% compared with the prior year period, to $546.7 million. Direct revenue at the company’s older apps excluding Tinder, such as Match, OkCupid and Plenty of Fish, increased for the first time in four years. Operating income was $196 million, up 14% from the second quarter of 2019.
The video features kept users active on Match’s apps during the early stages of the pandemic, when in-person dating wasn’t an option, said Benjamin Black, an analyst at advisory firm Evercore ISI. That’s still the case in much of the country, even though many states have eased coronavirus restrictions, Mr. Black said. “It’s an important aspect right now to keep folks tethered to the brand,” he said.
Before the pandemic, customer adoption of video was low, Mr. Swidler said. The company tested both one-on-one videos and live video streams on Plenty of Fish in the fall.
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