Morgan Stanley has its doubts about the potential of Tinder’s premium service, according to a letter to clients.
In the note, picked up by Business Insider, Morgan Stanley says a pricey premium subscription option for Tinder Plus will not work, because the majority of the app’s clientele are young.
Morgan Stanley said that younger people are simply not used to paying for dating and social services:
“First, given the young age of the target demo and frequent unwillingness to pay monthly recurring fees for social services, we believe Tinder will not have much success monetizing with a high-cost recurring monthly subscription offering.
“The challenge with freemium (charging for re-swipes, undos, read-receipts) is that a very small percentage of single people have shown an interest in paying for online dating. We think Tinder’s ‘casual dating’ offering will see a similarly low take-up rate of willing payers … In our models, we assume that 5-6% of Tinder users become paying members.
“We view Tinder’s unique ‘casual dating’ use case being primarily aimed at single people from 18-34. While there could be some growth in older demos, we think it will be limited … We also believe there are limits to the percentage of single people who will become active Tinder users and repeating ‘casual daters.’ And in our view, Tinder is reaching those limits in the US and Europe (30%-40%).”
Tinder Plus is due to launch in March, and will give users an undo and passport feature – letting you take back a swipe, and change your location.
The company have been testing pricing for the service, with users reporting being offered Tinder Plus for anything from $0.99 to $19.99.
However this range of pricing, alongside the simultaneous testing of limited swipes, and the subsequent media coverage and social media chatter, has made Tinder’s rolling out of the service seem rather confused.
Many people have been offered the service for over $10 and have voiced their unwillingness to pay such a subscription for the two features on social media.
In addition to this, Tinder users were being met with a screen saying they had run out of likes, and were being asked to buy a subscription for unlimited swipes.
Tinder founder Sean Rad spoke to Tech Crunch to clarify these reports, saying it was merely a tool designed to “temper bots and spam and protect our ecosystem” – and would not be seen by the vast majority of Tinder users.
However since then more users have been met with the paywall, and even more stories have appeared in the media saying Tinder are about to “end unlimited swiping”.
It certainly seems an odd choice to test a price range for the passport/undo service and trial limited swiping at the same time, in the run up to launching your monetisation strategy, as it will obviously create uncertainty.
And in the UK, the Tinder Plus screen is showing a box saying “Turn Off Ads” for uninterrupted play (see above) – suggesting Tinder could also be bringing ads to the app.
This all adds up to a lot of confusion around the release of such an important premium service, for Tinder and the dating industry, which may well turn some users off the service, before it is officially launched.