The online dating industry is estimated to be worth $4 billion worldwide in 2011. Reports estimate that 5.5 million U.S. residents use some kind of online dating service. Earlier this year, FriendFinder Network, one of the leading players in personals and social networking for adults went public.
FriendFinder Networks (NASDAQ:FFN) claims to be a leading Internet-based social networking and technology company that operates social networking websites that provide services such as online personals, chat and video rooms, instant messaging, photo and video sharing, blogs, message boards, email, and premium content websites. Their websites are focused on attracting viewers of diverse cultures and include sites such as Amigos.com, AsiaFriendFinder.com, FrenchFriendFinder.com, and SeniorFriendFinder.com, to name a few.
Florida-based FriendFinder was established in 1996 by Andrew Conru and claims to have more than 100 million registered users worldwide. FriendFinder was owned and managed by Various Inc., a company that was bought over in 2007 by publishing giant Penthouse Media Group for $500 million.
The company earns revenues through a subscriber fee it charges to members and through advertising revenues on their sites. Revenues are organized into two key verticals: Live Interactive Video and Entertainment. Video revenues for the recently ended quarter grew 5% over the year to $20.7 million and entertainment revenues grew 7% year-over-year to $5.6 million. During the quarter, they reported a net income of $20.3 million.
To continue to grow, FriendFinder is not only diversifying geographically, but also expanding the nature of services offered to include casual dating, social commerce, alternative lifestyles, and gaming. Recently, they acquired JigoCity for an estimated $65 million. JigoCity is a Los Angeles–based local deals site that operates sites in Australia, Brazil, China, Hong Kong, Singapore, and Taiwan with plans to expand operations in two more countries. Reports peg JigoCity’s revenue to be at about $600,000 in July and $1.1 million in August, accruing from a membership of more than 1 million users. FriendFinder hopes to leverage JigoCity’s business model with their own social networking platform to expand into the growing field of daily deals.
Earlier this summer, they also announced the acquisition of PerfectMatch.com, an online dating service. PerfectMatch.com came with a proprietary compatibility tool, Duet Total Compatibility System, which claims to analyze members’ personalities, values, ideals, and other life preferences to help find a suitable companion.
Meanwhile, their stock is trading at $1.01 after having listed at $10.00 a share in May of this year. Market capitalization stood at $31.53 million.
Some of the other players in the online match making sector include eHarmony.com and IAC’s Match.com. These U.S. players are fast encroaching on FriendFinder’s territory, as we will see below.
Santa Monica based eHarmony was founded in 1999 to offer services similar to Yahoo! Personals which let users sign up free and use their services. However, eHarmony came with an added privacy option that made it more suitable for women searching for relationships online, as well as sophisticated matching algorithms. Since then, eHarmony has expanded to more than 37 million registered users and claims to offer compatibility matching tools that helps match users based on values, character, intellect, humor, beliefs,and other aspects.
eHarmony earns revenues through a subscription-based model. Subscription prices vary from $60 per month for a single month down to $20 per month for a year-long subscription. Their latest financials are not known, but the company is said to have been profitable since 2004. They surpassed cumulative revenues of over $1 billion in 2009 and are on an annual revenue run rate of $250 million.
eHarmony has managed to raise $113 million in funding so far through investments of Sarofim Fayez and venture capitalists including Sequoia Capital, Technology Crossover Ventures, and Tuputele Ventures.
eHarmony has also been focusing on international markets. They are present in ten countries including the U.K., Australian and Canadian markets. Last year, they also acquired a 30% stake in the German dating site eDarling.de. Apart from geographic expansion, eHarmony is also expanding usage within its existing markets through the launch of mobile apps. More than 1 million members have downloaded these iOS- and Android-based apps since their launch in late Q3 2010. eHarmony claims that more than 500,000 eHarmony profiles are viewed on mobile applications each day.
Online dating services leader, Match.com, began operations in 1995. They were acquired by IAC for $50 million in 1999. Match.com claims to have more than 1.66 million paid members worldwide, and add an estimated 20,000 members daily. They ended the recent quarter with revenues of $132.3 million, reporting growth of 25% over the year. Match’s operating income of $36.7 million, however, dropped 4% over the year.
IAC has been expanding Match’s core business through acquisitions. Earlier this year, they acquired another online dating company, OkCupid, for $50 million. OkCupid focuses on a younger population and earns revenues primarily through advertising. Unlike Match.com, OkCupid lets users connect with each other for free. Earlier this summer, IAC had put up an offer to buy out majority stake in Europe’s largest dating site, Meetic.com for $500 million. IAC already owned 27% of Meetic’s shares. Meetic has operations in 16 European nations in 13 languages. They reported revenues of $266 million last year and have a market capitalization of $437 million. In August of this year, IAC announced holding of 77.6% shares in Meetic’s business. Through the acquisition, Match.com has become a force to reckon with in the international dating market.
In addition, there are many regional players in India that are substantial in size, and add to the rapidly growing popularity of the genre. So if you are looking for a date, or a bride, get going!