How Tinder became the world’s highest-grossing app
Tinder was created in 2012 within the start-up incubator Hatch Labs, which was a joint venture between IAC/InterActiveCorp (NASDAQ:IAC) and Xtreme Labs. Tinder became a major growth engine for IAC, which spun it off with other dating apps in Match’s initial public offering in 2015.
Tinder’s innovative system of swiping left and right on potential matches simplified the dating process and caught fire with younger users. Over a third of Tinder’s users are now between the ages of 18 to 24, making Generation Z its largest demographic. Match subsequently monetized Tinder with two premium subscription tiers.
Tinder Plus, which was introduced in 2015, lets users undo swipes, swipe for overseas matches, use five “super likes” to get other users’ attention, and deploy monthly “boosts” to increase the visibility of their profiles. In developed markets like the U.S., Tinder Plus costs $10 per month for users under the age of 30 and $20 per month for older users. Users in developing markets generally pay lower rates.
Tinder Gold, which was launched as an upgrade for Plus in 2017, added curated “top picks” and the ability to see who likes you to start chatting right away. Gold costs an extra $5 a month for Plus users, $15 per month on an annual basis, or $30 per month on a monthly basis. Last August, Match claimed that Gold subscribers accounted for over 70% of Tinder’s entire subscriber base.
Tinder’s total subscribers grew 39% annually to 5.7 million last quarter, as the app’s average revenue per user (ARPU) rose 9%. By comparison, Match’s total subscribers (across all its apps) grew 19% to 9.6 million, and its total ARPU rose just 4%. Tinder’s audience remains small relative to those of other mobile apps, but it generates most of its revenue from stable high-margin subscriptions instead of lower-margin ad revenue.