IACI actually makes a good move

By: ispeculatornew
Date posted: 02.20.2009 (4:00 am) | Write a Comment  (0 Comments)

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matchIAC Interactive, a company I shorted with success (vs Google) on a January 23rd trade is involved in several internet businesses that are seeing a major slowdown, especially in the finance sector but also in dating and its main property is Match.com, one of the main internet dating properties. The problem of course is not caused by the lack of users. There is arguably more and more internet users looking for love online every day and as such it certainly looks like a great business in theory. The problem of course is that there exists an increasing number of ways to get this done without paying any fees.

Users can now use social networks such as Myspace or Facebook to look for prospective lovers. And there are even some very important dating sites that do not use paid memberships as a business model. One of the sources I use to get information about the business of online dating is on the blog of the founder of PlentyofFish, arguably the most important free dating website in North America. He has written about how even Match.com has launched (although under another name), a free dating service. And the industry is certainly going through important changes. While leaner companies such as PlentyofFish are able to live off of advertising income because of a low cost structure, others such as Yahoo!, Match.com, etc are finding it a lot more difficult. And there is no question why in my opinion. They have a lot more resources than needed in most cases. Look at Match.com and you will see they have offices in Dallas (Headquarters), Beijing, London, Madrid, Munich, Paris, Stockholm and Tokyo. Say what? Why in the world do they need all of those offices? Just does not seem like a winning combination.

But actually, today IACI made a good move selling its european operations of Match.com to Meetic.com, the leader in that market. Of course, if it was a great move, IACI would be selling the company for cash. But instead, an important part of the deal is in stock of Meetic.com. But at least, perhaps Match.com will put more energy on the US market. In my opinion, dating is one of those sectors that is very difficult to leverage. It will always be very difficult to compete against a free local website that is popular among the local population.

For example, I live in Quebec where the leader in online dating is Reseau Contact owned by Quebecor, a media company that is very well implemented in the region. So for a US or foreign company to actually make it here would require a very important budget and probably not be worth it. And unfortunately for “Global Dating websites”, it is the case in much of the world. Social networks have somehow gone past these borders mainly through the way they help connect friends not only localy but internationally, giving a more “local” feel to users.

So not a perfect move, but without any doubt a positive one as Match.com will spend less energy on Europe and perhaps try to be a leader in the US….

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