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Matchmaking agencies here are facing a bleak business outlook as a growing number of young adults delay marriage or choose to live alone.
The industry has also become the “red ocean” in which competition gets fiercer and profit margins dwindle as a result of the soaring number of online-based agencies that offer services at extremely low prices.
Sunoo, the country’s first matchmaking agency established in 1991, has been under a court-managed workout program since August. The firm filed with the Seoul Central District Court for bankruptcy protection in July as it became financially unable to meet debt payments.
In a petition filed with the court, the company said its new business model incurred higher costs than initially expected with earnings falling short of expectations.
``Customers used to pay up to 3 million won ($2,700) in annual membership fees for dates arranged by dating agents. But in 2005, we launched a new online-based business model that charged only 30,000 won a year,’’ Sunoo CEO James Lee said. ``It aimed to provide our clients with high-quality but low-cost matchmaking services. But unfortunately, we faced a temporary financial difficulty and had to file for court protection.’’
Lee said the company still operates normally, adding it will graduate from the workout scheme as early as next year.
Sunoo has helped over 23,000 couples tie the knot over the past two decades through a couple manager system and other unique marriage consulting services. But it relinquished its industry leadership to Duo in mid-2000.
Matchmaking industry watchers say the sector has been undergoing hardship in recent years as a fewer people get married due to financial and other reasons. Additionally, large numbers of matchmaking agencies have been popped up particularly in cyberspace, slashing membership fees charged to customers.
According to Statistics Korea, 404,931 couples tied the knot in 1990 across the country, but the figure fell to 329,087 in 2011.
In contrast, the number of matchmaking agencies has jumped over the years because anyone can start a business as long as he or she registers with the government.
Now, the figure is estimated at over 1,300 nationwide, with about 370 operating in Seoul alone. There are more unregistered agencies doing business in cyberspace.
Against such a backdrop, matchmaking agencies are forced to spend more on marketing to attract customers.
Industry leader Duo earned revenue of 29.2 billion won last year, up from 24.4 billion won in 2010. But its operating earnings were halved to 1.6 billion won from 3.3 billion won due to surging marketing and other operating costs.
``We are no exception to the ongoing economic downturn. All companies involved in the sector are struggling to stay afloat. We are doing everything to cut costs and introduce differentiated marketing from our rivals,’’ said Duo spokesman Kim Seung-ho.
He said Duo will strengthen its leadership position in the domestic market, while exploring business opportunities abroad for a new source of income.
In August, Red Hills went bankrupt and was acquired by one of its competitors The One Noble. Another matchmaking agency Wediann went out of business in February.
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