The world’s top dating app, Tinder, is credited with bringing about an ‘online dating revolution’ for the millennial generation (born 1980-1994).
Tinder, which once changed the dating culture for young people, is struggling to gain traction with Generation Z (born after 1995). Tinder has ultimately replaced its chief executive officer (CEO) and is taking bold steps to shed its ‘hookup app’ label amid plans for a major transformation.
The Wall Street Journal (WSJ) reported on the 28th (local time) that CEO Faye Iosotaluno of Tinder will resign at the end of this month.
The new CEO will be Spencer Rascoff, who is a co-founder of the online real estate platform Zillow.
Match Group, the parent company of Tinder that also owns several popular dating apps like Bumble and Hinge, hired Rascoff as group CEO in February. Rascoff is expected to oversee not only group management but also directly manage Tinder, which generates the largest revenue within the group.
Rascoff emphasized in a private message sent to employees that Tinder needs to undergo fundamental changes.
Tinder is an app that helps users find their ideal partner by lightly swiping on their smartphone screen. With a simple and revolutionary user experience (UX) that allows users to view dozens of profiles in just one minute, it quickly dominated the global dating app market.
However, Rascoff noted, ‘Honestly, the primary user demographic of Tinder, those aged 18 to 28 in Generation Z, is not a generation that enjoys dating.’ He added, ‘They don’t drink much, and they don’t engage in sexual relations often.’
He further stressed, ‘We need to improve Tinder to reflect this reality.’
Rascoff decided to shed Tinder’s long-held negative image as a ‘hookup app’ or ‘dating factory.’ Instead, he declared that he would transform it into a platform that supports ‘meaningful and authentic connections’ desired by Generation Z.
Tinder’s transformation is a matter of survival rather than choice. According to Bloomberg, the number of Tinder’s paid users has decreased for six consecutive quarters, putting it in a precarious situation, nearing the 10 million mark.
The performance of Match Group, of which Tinder accounts for over half of the revenue, is also deteriorating. The company’s stock price has dropped 82% from its peak on the Nasdaq. Once valued at over $50 billion (approximately 68 trillion won), its market capitalization has shrunk to about $8.3 billion (approximately 11 trillion won).
Dating apps like Tinder experienced explosive popularity worldwide during the pandemic. However, they are now struggling as the ‘offline dating’ era reopens following the end of the pandemic.
In particular, there is a rapidly spreading fatigue regarding superficial connections, especially among Generation Z, who are highly immersed in online interactions. According to App Annie, 61% of app users aged 18 to 29 in the United States have deleted a dating app within the last year.
Bumble, which is led by women in making connections, has also seen its growth slowing and profitability declining, leading to the resignation of founder Whitney Wolfe Herd last year. New CEO Lydian Jones carried out a large-scale restructuring, laying off about 350 employees, or roughly 30% of the total workforce, shortly after taking office.
Smaller apps like Coffee Meets Bagel are facing even tougher situations. Last year, this app recorded annual revenue of approximately $16 million, a 36% decline compared to its peak in 2018 when it made $25 million.
Forbes analyzed, ‘As fatigue over casual encounters spreads across Generation Z, dating apps have hit a limit.’
Currently, among major dating apps, only Hinge is experiencing growth.
Hinge aims for serious relationships rather than casual encounters. Its slogan is ‘designed to be deleted,’ implying that once you find someone meaningful, you won’t return.
According to the IT media Business of Apps, Hinge’s revenue is projected to reach $550 million in 2024, up 38% from the previous year.
CEO Rascoff plans to work towards improving Tinder’s relationship quality (質) to be like Hinge.
Rascoff announced that he will introduce an AI-based recommendation system. This system will comprehensively analyze users’ values, personalities, hobbies, etc., and utilize related technology to filter out fake accounts or inappropriate users.
He added, ‘We have made face photos mandatory in profiles and have introduced a new reporting system in collaboration with the sexual violence prevention organization RAINN to enhance user safety.’
Financial firm Jefferies forecasted that Tinder’s revenue will experience a single-digit negative growth rate this year. Considering the trends of user attrition and its revenue model that relies on paid subscriptions, it is expected that a substantial recovery won’t be possible until after 2027.