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The overall market has experienced significant changes in recent years. One of the major portions that have shifted is the online dating industry. Some would say that 2020 represented a turning point in trust and technology for the industry. More people are using the systems, technology is improving to support all kinds of romantic outcomes, and a growing sense of trust in online dating makes it an intriguing prospect for investors. With all that in mind, it is important to consider whether it’s worth investing in the online dating industry or if the model is not sustainable for those looking to make money.
What are the Advantages and Disadvantages of Investing in Dating Services?
Once upon a time, meeting someone on the singles website seemed like something strange and unusual, but now online dating has become an everyday occurrence. As such, it’s worth looking into the advantages and disadvantages that come with operating in this space as an investor. Here is what you need to know.
Advantages:
- Online dating will continue to grow
Online dating is poised to become one of the most popular means for people to meet their romantic partners. Roughly half of the people have tried online dating in the age group under 34, and many people in the older age groups are starting to take an interest. With so much potential for growth, investors could make money if they choose the correct venture.
- Online dating services are easy to monetize
Dating services can be monetized through advertisements, partnerships with others, and subscription models. These efforts are more than enough to generate the income that people desire as investors, and new methods of monetizing online dating are emerging every day.
- Most development is coming from third-party systems
Most of the development of online dating tech is not funded by dating sites. The smartphone makers and app developers are the ones creating all-new functionality. Investors can put money into their direct product instead of having to fund the technology that makes it all work.
- Multiple investment opportunities
There are a lot of online dating sites in the present day, and they can all use investors. With so many opportunities, investors could seek a match with a company that serves their needs best.
Disadvantages:
- Revenue growth could be slowing
Some studies have shown that revenue growth in online dating is contracting a bit. The fast growth in the 2010s was driven by large numbers of new users that falling off. The growth market looks good but not great.
- The market is saturated
Dating websites are around for every single niche and area that one can imagine. Unless a dating site is able to offer a new experience or an improved outcome, people are going to use the tried-and-true dating sites and methods to which they’re accustomed.
- The business model is not conducive to investment
The investment model for online dating is not one that is as conducive as investors would like. The entire idea behind online dating is to lose your customers all the time as they settle into long-term relationships and marriage. It’s hard to build a customer base and get money from them when they might only use your site for a week at a time.
These positive and negative considerations of online dating are ideas that investors must bear in mind when they are making the decision about whether to invest or not.
How Changing Market Dynamics of Online Dating
The market dynamics of online dating are changing rapidly in the present day. According to the experts, online dating is forecast to decelerate in growth over the next four years. However, the one thing that no experts were able to take into account over the last year is the advent of online dating as a response to lockdowns. That forecast might not be relevant since online dating sites saw tremendous growth in new users over the last year and will likely continue to see that occur in the next few years. The overall growth of 13% was recorded. That being said, growth in some markets is a bit better than in others. North America alone contributed 37% of the new online dating growth because of the conditions in the nation during 2020. All in all, the market dynamics continue to change and struggle as a result of the fragmented market, numerous players, and uncertainty about the future. Still, when looking at the forecast market growth of $3.56 billion over the next four years, it is hard to evaluate the situation and leave with a wholly negative outlook.
Business Model of The Online Dating Industry
The business model of the online dating industry is notoriously difficult from a marketing and investment standpoint. As we have already mentioned, online dating relies on a model of gaining new users and shedding old ones at a rapid rate. On some sites, there is a churn rate of 70% year to year. Attracting new customers and trying to make money off of them before they leave the site is difficult. The desires of the site users change so frequently that it is hard for marketing groups to get a bead on how to approach them. Moreover, many investors can’t understand the users, who are mainly part of the young, fewer than 35 groups. Finally, the expansion model of dating sites is hard in the sense that it is hard to expand and scale. Every city has a page on the dating site these days, and it’s almost like launching a separate project every time the site expands. With all that being said, the business model has led to incredible growth that has made many sites and their backers wealthy.
The online dating industry might not be the easiest nut to crack for investors. The market is tough to operate in, and the changing values of online dating users can make it difficult to pin down exactly what they want. That being said, online dating is something to consider investing in because the sites are able to post large gains, something that every investor likes to see!
