Explain the strategic significance of the article using concepts discussed in class and/or using exhibits if appropriate.

"The Dating Business: Love On The Rocks; Tinder's Success Helps Fuel Explosion Of Dating Apps And Sites, As It Gets Harder To Turn A Profit In The Matchmaking Game," Wall Street Journal 10 June 2015

Like bunnies, dating apps have shown a knack for proliferation.

With a young, increasingly busy and mobile audience, the allure of the dating app business can be intoxicating. And the market is big.

Dating sites in the U.S. are expected to make $1.17 billion and dating apps are expected to log $628.8 million this year, up from $1.08 billion for dating sites and $572 million for dating apps in 2014, according to IBISWorld.

Apple Inc.'s iTunes store has more than 500 apps that are available to join and have a critical mass of users. But the challenge is to woo those same users.

Fickle singles often browse for recreation or roam from site to site. As Brianne Huntsman, an undergraduate student at Stanford University, who has sampled three free dating apps, puts it: "I thought the grass would be greener elsewhere."

And success--matching people in relationships--means they no longer need the service. At the same time, some dating apps are looking for hookups of their own.

Gay-dating app Grindr LLC recently hired investment bank Raine Group LLC to help it find a buyer, according to a person familiar with its finances.

More than 10 other dating companies were acquired in the past year, two by Barry Diller's IAC/InterActive Corp., which already owns nearly 22% of the market through an amalgam of sites and apps that includes OkCupid, Match.com and Tinder.

"In terms of revenue, the online-dating industry has matured, but there are too many players and not a lot are generating sufficient revenue for these sites," said Britanny Carter, analyst for research firm IBISWorld.

Some investors have been wary. They point to a constellation of challenges to growing the next dating app into a billion-dollar company: Although the stigma associated with dating apps is fading, people don't tend to push their friends to join the latest hit dating app, satisfied customers leave and expanding into other cities essentially requires creating a new marketplace. Plus, there haven't been many successful dating startup exits.

"There's a large swath of angels/funds who categorically refuse to invest in the dating category in the same way that many refuse to invest in games, hardware, gambling," writes Andrew Chen, a startup adviser and former venture capitalist in the San Francisco Bay Area. "It's an uphill battle for dating apps to attract interest."

Still, some entrepreneurs are getting help from venture capitalists, who have poured $148.8 million into the industry since early 2010, according to Dow Jones VentureSource.

Players in the market range from mass sites such as Match.com and eHarmony to those specializing in an array of niche interests and clientele: Grindr and Her for gays and lesbians; Ashley Madison for people seeking extramarital relations; and GlutenFree Singles.

Even major players are under pressure: Online-dating platform Zoosk Inc. withdrew its plans for an initial public offering last month after more than a year of delays. While Chief Executive Kelly Steckelberg said the company was profitable the first quarter of this year, 15% of Zoosk staff was laid off in January.

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"Our decision to revisit taking Zoosk public at a later date is a result of being focused on profitability and sustainable growth to ensure Zoosk's continued success," Ms. Steckelberg said.

Grindr CEO Joel Simkhai declined to comment on whether the company is pursuing a sale, but said his service is profitable and is expanding. Mr. Simkhai said Grindr had 1.9 million daily active users in April, from 1.4 million in 2014.

"When it comes to being a business, dating apps have a really disturbing paradox. The better you are at matching people, the more quickly your customers evaporate," said Patrick Chung, co-founder and partner at venture-capital firm Xfund.

To build a fruitful user base, most dating apps and sites are free to join. Marketing to attract those is what can be expensive.

"Customer acquisition in the dating industry is the most important, horrendous and difficult thing on the planet," said Mikolaj Piskorski, professor of strategy and innovation at IMD business school in Switzerland.

With a couple of exceptions, such as Tinder and Grindr, few dating apps have gone viral. Zoosk, which has both free and paid features, spent $40.4 million on marketing during the first quarter of 2014 to acquire new members, for instance. Zoosk declined to disclose the amount it has spent on marketing this year.

To combat the churn of users, the League, a dating app that focuses on the high-end market, invites some users to "go steady," and promise not to use any other dating apps, in return for an algorithmic boost. The contract states that users who agree to delete their other dating app profiles will get access to the League's "highest performing" profiles and get a first look at the profiles of new members.

Most of the apps that are generating revenue, such as Grindr and Match.com, do so with a combination of advertising and freemium features that users can access through subscription.

That users switch so frequently between sites has benefited IAC. It owns more than 10 dating sites and is able to encourage customers to try out its other sites too.

IAC doesn't disclose revenue for its individual sites, but revenue for its dating properties as a group rose 2% during the first quarter of this year, compared with a year ago. The number of paid subscribers for all of IAC's dating apps grew 16% during the same period, according to a company filing with the Securities and Exchange Commission.

Part of the reason users still pay to join some dating sites, despite free alternatives, is because it allows them to meet others who have chosen to pay to meet people as well.

"It demonstrates a lot of commitment when someone has put a coin on the table," said Mark Brooks, CEO of Courtland Brooks, a company that helps dating companies with business development.

Neil Clark Warren, the founder of eHarmony, said in March that his company, which charges subscribers $18 to $60 a month, last year logged more than $275 million in revenue, its highest level in several years.

Dating app entrepreneurs are aware of the challenges, but they point to the success of Tinder as evidence there is still demand for new ways to discover potential mates via a smartphone. A recent funding round valued Tinder, which pioneered swiping through images of potential dates as a way of finding a match, at close to $1 billion; the IAC unit doesn't disclose how many users it has.

"The old dating websites operated on the belief that you had to fill in criteria to find a perfect match. They were too time-consuming," said Marie Cosnard, head of communications for Paris-based dating app Happn, which has 3.5 million users. "Tinder was a revolution. It showed us that swiping quickly could be a success."