Online Dating Industry in India, a ₹539 crores crores opportunity

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According to the 2011 census, more than 8.5 crores urban Indians were single and potentially looking for partners. The recent judgements by the Honourable Supreme Court of India decriminalising adultery and consensual LGBT relations opened a market to be acquired. Some niche and unusual dating apps started betting big on India’s growth story.

Online Dating industry particularly focuses on mobile apps that allow users to flirt, chat or fall in love. Two of the world’s most successful online dating startups are Tinder and OkCupid. In July 2015, Bank of America Merrill Lynch valued Tinder at $1.35 billion. However, there are multiple players in the industry.

For your knowledge, online dating is somewhat different from matchmaking services. While matchmaking services help you find you a perfect match through datapoints and algorithms, online dating focuses on casual contacting and flirting and lets you decide your match based on your conversations. Dating sites and apps use some filters like age, location and other physical and preference attribute to help you narrow down the results.

We have explained some of the online dating industry statistics, all of them being sourced from Statista, a German online portal for statistics, which makes data collected by market and opinion research institutes and data derived from the economic sector

Online Dating Market Trend (India)

So, the online dating segment amounted to ₹434 crores ($62 million) in revenues last year. And the same is expected to grow at 5.7 per cent per annum till 2023, which will result in ₹539 crores ($77 million) in revenues in 2023. User penetration is 2.9 per cent in 2019 and will grow to 3.2 per cent by 2023. The average revenue per user (ARPU) stands at ₹110 ($1.57). If we talk about global markets, the United States generated the most revenue (₹5,579 crores) in 2018.

What to start and what not to

So if you are planning to start your own online dating startup in India, you must be aware of the scopes. Apps and portals to flirt, chat or fall in love (aka Android and iOS apps) have a great scope ahead. Startups that create matches based on user locations like Spotted also have a great future ahead while apps that create matches based on demographics criteria like Badoo also have a bright future.

While the opportunity in the online dating industry is huge, there are some grey areas that you should avoid. These areas have not witnessed success in the past. One of them is niche dating that includes portals and apps for vegetarians, or gym lovers, or travellers. Another one is casual dating for the search of non-committal sex. And, don’t even think of starting an offline dating agency that focuses on speed dating or similar events for singles.

Revenue and Revenue Growth

Online Dating Industry in India
Revenue

As you can see on the above graph, the revenue of online dating industry in India stands at ₹434 crores in the last financial year and is expected to touch ₹469 crores in this financial year. The graph also shows that the revenues will keep growing till 2023 and will touch ₹539 crores with a journey of ₹504 crores in 2021 and ₹525 crores in 2022. And all the above accounts for Paying Online Dating users which is also likely to grow in the near future.

Online Dating Industry in India
Revenue Growth

It is evident from the above graph that the Online Dating segment is expected to show a revenue growth of 8.7% in 2020. In 2018, the revenue growth was 8.6 per cent which rose to 9.4 per cent in 2019 due to the smartphone and internet penetration during the time. However, the revenue growth is expected to witness a downfall in the upcoming future. The growth will stand at 6.7% in 2021 and will decrease to 4.5% in 2022 and will finally lower down to 3% in 2023.

Users and Penetration Rate

Online Dating Industry in India
Users

By 2023, the total number of online dating apps users will touch the 4.59 crores mark. As you can see, the total number of users in 2017 was 3.49 crores which grew to 3.7 crores in 2018. It is expected that these numbers will keep growing and the industry will see 3.89 crore users this year. And the distribution ratio between paying and non-paying users is almost 1:1 which is likely to improve in the future.

Online Dating Industry in India
User Penetration

Definition: Market penetration refers to the successful selling of a product or service in a specific market. It is measured by the amount of sales volume of an existing good or service compared to the total target market for that product or service.

User penetration is increasing for the Online Dating industry in India. In 2017, the user penetration stood at 1.4% (paying users) and 1.2% (non-paying users) which increased to 1.5% (paying users) and 1.4% (non-paying users) in 2019. According to current market trends, it is forecasted that user penetration will touch 1.7% (paying users) and 1.5% (non-paying users) until 2023.

Average Revenue Per User

Online Dating Industry in India
Average Revenue Per User (ARPU)

The average revenue per user (ARPU) in the Online Dating segment in India amounts to ₹198.1 in 2017 which is expected to grow to ₹224 in 2023. The current ARPU in this segment is ₹207.9 which is 4.94% more than in 2017. The average revenue per user has increased at a 2.61% average annual rate and will continue to grow at this pace till 2023.

Demographics Breakdown

Online Dating Industry in India
Age Distribution

Online Dating Industry in India
Gender Distribution

Online Dating Industry in India
Income Distribution

If we talk about the demographics, around 52.5% of the users belong to the 25-34 years age group, according to Statista Global Consumer Survey, July 2018. The 18-24 years age group was the second most dominant with a 30.7% share and 35-44 years age group the third with 14.9% share. The 45-54 years age group forms 2% of the market and the 55-64 years age group do not use dating apps at all.

According to the survey, more than half of the total users (57.4%) were male and 42.6% were female (in all age groups combined in 2017. However, some reports suggest that only 26% of people on a dating app are women compared to a majority of men, according to a survey by Woo — a dating app which surveyed 20,000 users.

The income group distribution is quite fascinating as it shares equal parts for low, medium and high-income individuals. While low-income individuals (non-paying customers in most of the cases) consist of 36.1% of the total dating app users and high-income group consist of 34% of the total users. Medium income group shares 29.9 % in the industry.

Most of the dating apps also earn their revenue by displaying advertisements to non-paying users. It is evident that more than 50% of the users do not pay for using these apps, the startups take on the advertisement-led revenue model to cover their operational costs.

Dating Users look for

Online Dating Industry in India
User Preferences

In a survey conducted in 2017 and participated by 6,458 online daters over the age of 16 years from 30 different countries, 48% of the users said that they look for ‘fun’, among other things. While 41% said that they use dating apps to find friends and 19% use these apps to find a partner. Only 13% of users use these apps to get laid.

According to MarketWatch, online dating apps is popular among homosexuals and the second most popular way to meet new people and find partners for heterosexuals. Heterosexuals often find partners through mutual place in the first place.

Global Comparison

Online Dating Industry in India
Revenue Comparison

Online Dating Industry in India
User Penetration Comparison

The United States tops the chart if we talk about revenue accounting to ₹5,579 crores in total sales in FY18. China comes next with ₹1,701 crores in revenue and the United Kingdom comes third with ₹518 crores in revenue in FY18. However, India surpassed Germany which garnered ₹329 crores in FY18.

If we talk about user penetration, the United States against tops the list with a whopping 10.8% user penetration. Canada is very close to the United States with 10.2% user penetration and Hong-King, Russia and Sweden come next with 9.1%, 9% and 8.9% user penetration rates respectively.

According to research firm IBISWorld, dating services in the US will be a $3 billion a year business in 2018, growing since the previous year. Around 15% of US adults, or around 50 million Americans, say that they have or continue to use websites or mobile dating apps in their pursuit of romance.

Online Dating Companies in India

There are several dating apps and startups in India. While apps like Tinder needs no introduction, the startup is based in the United States but also operates in India. Tinder has raised ₹350 crores in total funding since its inception in 2012.

France-based online dating app Happn also has an impressive presence in India. Founded in 2013 by Antony Cohen, Didier Rappaport and Fabien Cohen, the startup has raised ₹154 crores in total funding.

Delhi-based TrulyMadly is one of India’s oldest dating startups. Founded by Hitesh Dhingra, Rahul Kumar and Sachin Bhatia in 2013, the startup has raised around ₹40 crores in total funding since its inception.

Gurugram-based Woo is another name in the Indian dating industry. It was founded by Ankit Nautiyal and Sumesh Menon in 2014 and has raised funds from Matrix Partners and Omidyar Network. It acquired Los Angeles-based dating app Dus, Inc. in 2017.

Other startups like Bumble, Kama, Bloomy, Aisle, Frivil, Zoosk, Match, OkCupid, Hinge, Coffee Meets Bagel, TryDate, Moco, and Grindr also target Indian consumers.

Venture Capital and Dating

Due to the involvement of technology, venture capitalists are attracted to the dating industry. While the funding was up in 2014, the size of the individual rounds is declining. Dating apps often require huge sums of money as the cost of user acquisitions is high in this industry. From early 2016 to 2017, the early-stage online dating startups raised only ₹49 crores ($7 million) in funding.

While in the time period between 2010 to 2015, venture capitalists were more inclined towards the dating industry and invested close to ₹1,050 crores. One of the reasons for the slowdown in investments is the lack of loyalty and monetization. Most of the dating startups focus on user experience instead of revenue. However, the hope is still out there.

Closing Up

It might be hard to imagine or remember, but there was once a time when going on a date with a stranger you met online was a strange concept—frowned upon, even. Today, however, millennials have led the charge on transforming the dating industry and making online dating universally accepted.

In fact, a January 2018 Statista survey revealed that 12% of 18-29-year-olds admit to being in a relationship with a partner or spouse that they met online. If you continue to have doubts, consider that there are now over 1,500 dating apps or websites looking to draw single men and women to their product, and to match them with one another.

So, what are your thoughts on this story?
Tell us in the comments.

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