ECONOMY - 18 FEB 2020

Is there an online market for love in Nigeria?

Is there an online market for love in Nigeria?
Nigerian couple at a wedding.   Source: Duncan Kelman via Flickr

Everyone is looking for love; at weddings, at church, in traffic, and, of course, online. From traditional matchmakers to modern dating services, helping people find “the one” has always been good business. Today, digital dating platforms are pushing for the crown.

Back in 1965, a team of Harvard students created what is now regarded as the world’s first digital dating service: Operation Match. The process was neither easy nor cheap. For $3 per session (approximately $22 today), those seeking love had to go to the test centre, answer a 75-question survey, wait for the questionnaire to be analysed by the room-sized IBM 1401 machine, and then wait even more days to receive the results of their top six pairings.

Today, thanks to technological advancements, things are a lot simpler. For millions of users signed on to dating platforms, love is simply a swipe or click away. And for entrepreneurs looking to cash in, there is money to be made, as revenues from the dating app market are estimated to reach $2.5 billion by 2024

Yet, for all the promise of financial and amorous reward, Nigerian entrepreneurs—much like their African peers—have shied away from the business of online dating. While digital enterprises remain a growing field of interest for many Nigerian entrepreneurs, only a handful have ventured into the dating app space. Why?

 

No need: Nigerians are not using dating apps

Before launching a product or service on the market, most entrepreneurs will consider whether there is enough demand for their business offering. When it comes to dating apps in Nigeria, demand is low.

Several years ago, one could have pointed to the high costs of data and exclusivity of smartphones as perhaps the main reasons behind the status quo. While this remains a valid point, it is worth noting that even with the 122 million active internet users and 40 million smartphone owners currently in Nigeria, only 2.1 million people are registered on online dating platforms; the number is the same in Kenya, even though active internet users are fewer than 50 million. 

To get some clues for the low usage in Nigeria, a quick survey of 175 Nigerians was conducted on Instagram. Although not a nationwide test, it provides some insight as to why Nigerians are shying away from dating apps. 

When asked for their main reasons for staying away from dating apps, half of the respondents cited the reputation of the platforms. For them, dating apps in Nigeria are known for being spaces that purely facilitate sexual transactions, rather than more wholesome romantic connections. Some women recounted how following a ‘match’, they had been greeted with ‘how much?’, while others spoke of how common it was to find ‘nightly rates’ included in the profiles of users, much to their dismay. 

Aside from the damaged reputation of dating apps, a third of respondents cited ‘trust issues’ as another reason for not using dating apps. Of course, when it comes to online dating, trust is a universal concern for users across the world. Most commonly, we hear about users being ‘catfished’. In Nigeria, however, these concerns seem to run deeper. Asides from our general culture of mistrust, many users expressed fears of being kidnapped, scammed or robbed by their purported love interests.

Finally, 12% of respondents highlighted the stigma attached to online dating and the remaining 8% stated a preference for using social media platforms such as Facebook and Instagram.

Collectively, these reasons provide a glimpse into why the demand for dating apps in Nigeria is low. For passionate entrepreneurs, addressing these users’ concerns could truly be a herculean task—one that may not be worth it.

 

It will end in tears: A difficult venture

Asides from the difficult competitive landscape in this market, when it comes to launching a dating app in Nigeria, the even bigger question for the entrepreneur is: realistically, how much revenue can be generated? In 2018, Tinder and Badoo drew in global revenues of almost $800 million and $300 million, respectively, and as glamorous as these figures are, making money in the dating app business is no easy feat.

Across the board, the business model for online dating businesses are similar; they operate on a ‘freemium’ or a subscription basis.

A subscription-based model is simple. Users pay a recurring fee at regular intervals to access the product. On the other hand, under the ‘freemium’ model (coined from ‘free’ and ‘premium’), the company offers a basic version of its services to customers for free, while advanced features attract a ‘premium’ that require a fee. For example, users may be able to register and connect with other users for free, but the number of connections they can make each might be limited without paying the required fee. Under the ‘freemium’ model, the idea is that once customers fall in love with the free version, they will be willing to purchase additional features of the product to maximise their usage.

That said, most customers stick to the free versions. Of over 50 million Tinder users, only 4.1 million are paying subscribers. This business model becomes particularly challenging for Nigerian entrepreneurs looking to break into the dating app market for three reasons. 

Firstly, Nigerians love free things. The typical Nigerian is unlikely to pay a premium on advanced services when they can already enjoy the basic one for free. For the majority, using free basic services that produce results regardless of slight ‘discomforts’ or ‘restrictions’, is more than enough. So, when the success of a business hinges on the hope that free users will be compelled to upgrade to a premium product, in Nigeria, this could end in disappointment.

Still, this is not a Nigerian-specific issue but the problem here is a lack of scale. Phil Libin, CEO of Evernote, once said, “The easiest way to get one million people paying is to get one billion people using.” The likes of Badoo and Tinder are only so successful in generating revenue because they have millions of registered users. Nigeria’s largest dating app Friendite has around 84,000 registered users—a long way away from a desirable financial position. Given that only a small percentage of people (say, under 5%) will pay for dating app features or subscriptions, Nigerian dating apps need a lot more customers. 

Another obstacle here is that the online subscription market is not quite developed in Nigeria. Issues of digital trust, and technology such as direct debit payment infrastructures, while evolving, remain causes for concern. Of course, we can cite a company like iROKOtv as an example of a Nigerian business that has successfully tapped into online subscriptions. However, when you look at the fact that most of its subscribers are outside Nigeria, optimism dampens a little for the entrepreneur hoping to launch a dating app in Nigeria. 

We can see why many Nigerian entrepreneurs keen on online businesses have not ventured into the dating app space; there really is a good chance it will end it tears. Demand is low, foreign alternatives exist, and it’s difficult to make money with the current market size.

The answer to those who wonder whether there is a market for dating apps in Nigeria is: not now. There is still room for things to change. We have the underlying population numbers for growth, the final ingredient will be the shift in attitude towards dating apps. For now, however, Nigerians will probably stick to ‘sliding into the DM’ in their search for love online.

Follow this Writer on Twitter @Ife__O. Subscribe to read more articles in our newsletters here.

 

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Ife Otegbeye

Ife Otegbeye

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