Sometimes too much of a good thing is too much, and Match Group (NASDAQ:MTCH) may be running into that reality. The owner of online dating apps seems to be in love with buying up competing services, collecting rivals like kids collect baseball cards. At some point, enough is enough.

Addicted to love

The latest service to join Match's lonely hearts club is Hinge, a site that once billed itself as the "anti-Tinder" because it focuses on relationships instead of hookups. (Tinder is Match's marquee service.) The purchase leaves Bumble as the only major dating app not owned by Match, and the two are currently suing each other after having once been in a relationship where Match tried to acquire it for $450 million.

A young woman smiles while looking at her smartphone. Romantic cartoon hearts are flowing from the phone.

Match Group has an unhealthy addiction to buying rival dating sites. Image source: Getty Images.

Match already owns Tinder, OkCupid, PlentyOfFish, and a bevy of other sites -- not to mention its self-named site -- that total 45 in all. Putting another site into the mix adds little despite management's claim that Hinge is "highly relevant particularly among urban, educated millennial women looking for relationships."

According to the U.S. Census Bureau, there were 110.6 million people age 18 and over who were single in 2016, or 45% of all Americans over age 17.  Surveys indicate that 21% of the population has tried a dating app, and as many as 30% of millennials have tried one. Match Group reported it had 7.4 million subscribers in the most recent quarter.

Yet when it comes to dating apps, more is not necessarily better, as too many options means you end up making no selection, or what is called the "paradox of choice." Fewer choices may actually be better.

And Match could have tweaked any of its own myriad sites to encourage long-term relationships, not hookups, and have a competing brand, which, with Match's greater financial resources, could have made it a viable rival to Hinge.

For example, earlier this year, Tinder activated a Bumble-like feature that lets women initiate all contact with dating prospects. While on Bumble, it's the default setting; on Tinder it's an opt-in feature. CEO Mandy Ginsberg says Match has the ability to roll out this woman-friendly feature to all of its services. 

It's also piloting a location-based feature called Places that allows you to meet people who frequent the same places you do, and Feed, a real-time listing of recent activity so you have something to talk about with potential matches and another way to assess them. Adding better functionality to an existing service, particularly one that has achieved critical mass like Tinder, would seem a better use of resources than simply buying another app.

Lighting the flame

Match is obviously the leader in online dating, and not even Facebook announcing it was introducing a dating app could slow it down more than just temporarily. It has the biggest, most popular service in Tinder with 3.5 million paid subscribers. It added 1.6 million over the past year. And while scale can help in thwarting a challenge from an upstart like Facebook or fending off Bumble, buying up all of them doesn't necessarily add much.

Match has acquired dozens of services over the past nine years and in the past three years spent $610 million acquiring different brands, about equal to its cumulative operating earnings for the same period. While none of the deals have seemed to have gone like a bad date (it hasn't had to write down any of the acquisitions or take non-cash charges), the rise in Match's cost of revenues has outpaced its revenue increases due to acquisitions like PlentyOfFish and Pairs.

Moreover, Match's second-tier services work to lower its average revenue per user (ARPU) because they can't charge the same premiums as Tinder does. Last year, revenue from North America, which contributes 56% of Match's total, grew 9% as a result of more people signing up for Tinder. Yet North America ARPU was flat.

It is the law of diminishing returns in action, and the more Match puts into expanding the universe of services it offers, the lower the return it will extract from them.

Buying what it already owns

The deal for Hinge gives Match a 51% stake with the right to purchase the rest of Hinge within the next year. It first invested in the company last year and says that since then, Hinge's user base has grown by more than 400%.

Though Hinge doesn't disclose the number of users it has,  whatever the figure, undoubtedly individuals using dating apps have accounts at multiple sites, so Match is paying for members it likely already owns. Match's total subscribers hit 7.43 million in the first quarter, up 26% year over year, and some of them have to be Hinge members, too.

Tinder is Match's growth engine, and it is primarily responsible for the growth Match is experiencing, and is responsible for some 30% of Match's annual revenue of $1.3 billion. Match's revenue surged 36% in the first quarter, due to an impressive 26% gain in new subscribers from the year-ago period, along with a 8% increase in ARPU, though that mostly came from international growth.

Making another acquisition might put another dating app into Match's diverse collection, but it doesn't really do anything to bolster what is making money for it, namely Tinder.