In just two years the outlook for online dating has gone from hot and steamy to complicated romance.
Consider this: In 2011, Vancouver's own Plenty of Fish, an immensely successful online dating site, had revenues in the "tens of millions." Today the business is still strong, but its own chief executive officer admits its revenues aren't growing at nearly the same pace as its users or site visits.
The main culprit: the mobile revolution.
Plenty of Fish made a name for itself by offering a free online dating site that matched prospective couples with special algorithms. Although its no-frills website didn't look like anything special, it was wildly popular – something the Globe and Mail wrote about two years ago.
However, its business model was predicated on ad revenue, and the shift to mobile log-ins has upended the structure. Eighty per cent of Plenty of Fish's clients now visit using a mobile device, and "our revenues haven't kept pace with the number of users on mobile," chief executive officer Markus Frind said in an interview.
He isn't alone: major websites – from Facebook to media outlets – are trying to figure out how to monetize their mobile apps and sites, where ad space is much more limited.
On top of that, "Match.com had a couple billion to spend," Mr. Frind said, meaning the U.S. online dating giant, owned by Barry Diller's IAC, went on a buying spree to consolidate the industry.
"You can't really steal from the competitors anymore," Mr. Frind said. "The only way to really grow is to expand the category."
(If, by this point, the growth of online dating still sounds a bit wild, just ask a 20-or-30-something how many of their friends have profiles on sites such as Plenty of Fish or OKCupid.)
In this new world, Plenty of Fish has decided to do some buying of its own. On Wednesday the company announced its first major acquisition. The target: FastLife, a speed dating company.
In simple terms, the deal adds a new revenue stream. FastLife has figured out a way to make people pay for speed dating events, and Plenty of Fish wants in on that action. "We're buying a company that's figured out the business model," Mr. Frind said. Financial terms weren't disclosed, but FastLife generates annual revenues of $2.5-million.
Now the buyer is looking to ink more deals, hoping to spend $30-million in the next year. But Mr. Frind said he isn't quite sure of what he wants to buy.
Don't be surprised if the deals come in the mobile space, though. "The future of dating is all mobile," he said.