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Dating in China to heat up? Tinder’s on the way

Thursday, 12 Dec 2013 | 4:02 AM ET
Tinder CEO: No rush for paid-for content
Thursday, 12 Dec 2013 | 11:45 AM ET
Sean Rad, CEO of Tinder, says the app is a "more efficient way" for people to form relationships, and explains how it plans to monetize in the future.

The CEO of mobile dating app Tinder has revealed plans to expand into China within a year -- a move that would involve a significant shift in strategy as the only way the product's users can get in touch is banned in the country.

Tinder, which has grown at a remarkable rate since its launch in September 2012, enables singletons to view pictures of potential matches in their area. To avoid the use of fake accounts, users sign in through Facebook – which is banned in China.

This does not look set to deter Sean Rad, founder and CEO of Tinder, who told CNBC that China was definitely a market he wanted to be in.

(Read more: How to Turn YourSmartphone Into a Dating Device)

"China is the market that I think about a lot. There are a lot of sensitivities around entering that market, but we've definitely done a fair amount of due diligence and we do have plans to enter the Chinese market," Rad told CNBC.

"I wouldn't say we're close…I would say that within the next year we will definitely have a presence in China."

U.S.-based Tinder already has a significant - and growing – number of international users, and is currently available in 24 languages. Two of its fastest growing large markets are the U.K. and the Nertherlands where its user base is expanding by around 2 percent every day.

The app works by showing users pictures of potential matches in their area. If they like what they see, they swipe right; if not, they swipe left. When both parties are interested they are matched and – crucially only then – given the ability to message each other.

Tinder would not reveal the total number of its users, but Rad would say that the app currently clocks up around 400 million profile ratings – known as swipes -- per day across the world, resulting in over 4.5 million matches.

"Right now we're the top app in over 15 countries, and we're experiencing phenomenal growth throughout the entire world," Rad said.

Tapping China

These numbers could be considerably higher, however, if the app successfully tapped the Chinese market.

China had 464 million mobile internet users at the end of June 2013, according to the China Internet Network Information Centre, and that number is growing fast – up almost 20 percent from June 2012.

(Read more: China's hot messaging app WeChat may be good news for censors)

Source: gotinder.com

But to make this move, Tinder would have to lose its current link to Facebook.

New York-based Jeremy Edwards, lead analyst at IBISWorld which produces market research on global dating services, said that Tinder's Facebook ties made China expansion plans difficult.

"Plus, most of the dating apps in China have been tailored for that market specifically," he told CNBC. "So it's difficult to tell how an app like Tinder would be received over there."

In China and beyond this could mean new partnerships with local operators, according to Jack Kent, mobile and media industry analyst at research firm IHS in London.

"One downside (of being linked to Facebook) is that it limits the audience and excludes those not on Facebook," he told CNBC. "And in markets where Facebook is less prevalent, Tinder may need to tap-in to other social platforms and identities."

Facebook friend?

There are other potential problems with Tinder's link to Facebook. For instance, when it reported earnings in October, Facebook CFO David Ebersman admitted that the daily activity among younger teens has declined.

But Rad dismissed these concerns, arguing that Facebook gave the app authenticity. The app only lets users post images from their Facebook photo albums to further discourage fake accounts.

(Read more: Your app to find that 'perfect' someone)

"It's possible that in certain demographics or certain age groups that behavior is changing, but those users still have a Facebook account," Rad said. "Over the long-term as we expand into various markets where Facebook maybe isn't as prominent, we definitely need to think of internationally other ways of authenticating our platform. But for now, Facebook has been very good for us."

Indeed, Facebook certainly provides Tinder with a large base from which to pluck potential users. "With around 1 billion mobile users, no other social platform can compete with Facebook's global reach," IHS' Kent added.

Making money…

But despite its grand expansion plans – and massive user base - Tinder does not yet generate any revenue. The app is free, and "we intend keeping it free always," Rad insisted.

Monetization options open to Tinder include in-app purchases (such as a subscription model like Linkedin Premium) and advertising, Rad said, but would not disclose further details.

He added: "We're prioritizing product development and growth over monetization right now. It's something we will get to soon, but it's something that requires time, resources and effort."

Rad would not say when Tinder users should expect monetization features to be introduced, but added: "It's safe to say that we're months away."

IBISWorld's Jeremy Edwards said that one of the most lucrative options open to Tinder was selling user data on to third party.

(Read more: We used to meet in person - America's crush on online dating)

"Tinder knows a lot of information about its users – your name, age, sexual orientation, where you live, where you spend time… Advertisers are very interested in this kind of data," he said.

Too expensive?

But its current lack of revenue does not, of course, mean that Tinder has no value.

In March this year, 17-year-old British entrepreneur Nick D'Aloisio sold his Summly app to Yahoo for close $30 million, despite reporting no revenue, according to technology blog AllThingsD .

Is Tinder heading a similar way? It's currently an independent company, although IAC – which owns OkCupid and Match.com – is its lead investor.

"Our ambitions span well beyond just a simple sale," Rad insisted. "I don't think there's any company out there that could afford us."

By CNBC's Katrina Bishop. Follow her on Twitter @KatrinaBishop and Google

Update: This story has been updated to clarify the ownership status of Tinder.

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