Trends in Online Education
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Transcript of Trends in Online Education
Online Education Research Sami Muneer, SAP
Services
Content Delivery Engagement Evaluation
Tools
Structured Delivery Aggregation
Categories of Suppliers in Education
Content Structured Delivery (push)
Open Distribution (pull)
Engagement & Learning
Evaluation
Publishers Pearson, J. Wiley, McGraw Hill, K12,
LMS Docebo, Litmos,
Cornerstone
MOOC, OER, OCW MOOC: Coursera, edX, OER: Khan Academy
OCW: MIT OCW
Game & Simulation tools Languagelab, Dreambox
Formative (check learner’s progress)
Content Developers Vocational: Redvector,
Kineo, Tribal Custom: Brightwave
Talent Mgmt Systems SAP, Oracle, SABA
Skill Learning Platform Lynda, Pluralsight
Gamified Learning codeacademy, duolingo
Summative (benchmark progress)
ETS, Btl, Knewton
Gaming Kidspring, Quipper,
Serious Games Interactive, G-Cube
Learning CMS (education)
Desire2Learn, Blackboard
Social Network BetterLesson, Lore
Collaboration USC Online Program
Independent Experts e.g teachers
Degree Programs Devry, ITT, Capella, Career Education
Content Aggregator Catalogs: iTunes
University Social Media: youtube
Tools
Authoring Tools Trivantis, Adobe, Lectora, Kenexa, Courselab
Services
Business, Technical Bersin (Deloitte), Tutor.com
eLearning is a $135Bn* Market Globally With diverse suppliers across segments
Source: GSV Advisors
The Rise of the Aggregation Segment
Content Structured Delivery Aggregation Engagement Evaluation
790 54%
620 42%
57 4%
K-12
Postsecondary
Corporate
9 18%
28.6 58%
12 24%
Relative US expenditure in education $Bn, 2014
Relative US expenditure in elearning $Bn, 2014
• While K-12 sector represents the biggest education expense
• Higher Ed has led the expense in elearning
• Corporate sector spends almost 20% on elearning vs. traditional
Higher Ed has led the Transition to eLearning While corporate sector boasts a higher ratio of spend in it
Source: GSV Education Report, McKinsey, BMO Capital Markets
With Online-Only Degrees by For-Profit Schools Other postsecondary institutions followed suit
1989
Univ. of Phoenix first online university
(320K students today)
1994
CalCampus first complete online curriculum
1996
Jones International University first accredited fully web-based university
96% of universities offer online
coursework
Top online degrees by traditional universities*
• Bachelors: Penn State, U. of Illinois
• Graduate Engineering: UCLA, Columbia
Generate more money with online
Online MBA program, of
UMass, Amherst, makes up 26% of MBA enrollment but generates 40% of revenue
NOW
With Online-Only Degrees by For-Profit Schools Other postsecondary institutions followed suit
Source: US News and World Report
Leading to New Entrants focused on Higher Ed Segment
*More focused on skill-‐based programs
Higher Ed Provider 3rd Party
Aggregation OpenCourseware e.g. MIT, Stanford
MOOC / Online courses
(MOOCs: an aggregation model)
Year Founded # of Courses # of Students Cost
Udemy* 2010 9000 1MM $0 - $399
Coursera 2012 700+ 6MM Free
Udacity 2012 30 1.6MM $0 or $150 for college credit
Edx 2012 150+ 1.6MM Free
Most VC Investments in Open Distribution the Last 3 Years (New business models emerge to capitalize on trends)
Company ($MM) Sector Category
Users Content Structured
Delivery Aggregation Engaged Learning Evaluation Tools &
Services
Lynda.com 289 Corporate ✔ ✔ 4m+
Pluralsight 165 Corporate ✔ ✔ 750k
Desire2Learn 165 All ✔ 8m
Laureate Education 150 Post Secondary ✔ ✔ 800k
OpenEnglish 120 All ✔ 100k
Kaltura 116 Post Secondary / Corporate ✔ N/A
TutorGroup 115 Corporate ✔ N/A
Craftsy 106 All ✔ 5m
Knewton 105 Corporate ✔ 10m
Dude Solutions 100 All ✔ 2m
Coursera 85 Post Secondary / Corporate ✔ 11m
TeachersPayTeachers 64 K-12 ✔ 3.4m
Remind 60 K-12 ✔ 10m
Udemy 48 All ✔ 10m+
Aggregation Receives Most Funding Globally Primarily in US, followed by India and China
Source: GSV Educa=on Report, McKinsey, BMO Capital Markets
58%
12%
9%
21% USA
India
China
ROW
Global Education Fundraising Volume by Region, 2012-2013
70% Funding went into
aggregation globally
Importance of Curation
Selective vs. Open Aggregation
Content Structured Delivery Aggregation Engagement Evaluation
Category Company
Content Source Platform Services Evaluation
Own Content
Open Community
Authoring Tools
Expert-Curation
Algorithmic Curation
Social Features Testing Analytics
Open Aggregator $538m
(33% of total VC)
TutorGroup
OpenEnglish ✔ ✔ ✔ ✔ ✔
Craftsy ✔ ✔ ✔ ✔
Udemy ✔ ✔
Coursera ✔ ✔ ✔
TeachersPay Teachers ✔
Selective Aggregator
$454m, (28% of total VC)
Lynda.com ✔ ✔
Pluralsight ✔ ✔
Importance of Curation Open vs. Selective Aggregation
Category Company Focus
Monetization Rev ($M)
Subscription Paid Courses
Software Subscription
Add on Services
Open Aggregator
$538m
(33% of total VC)
TutorGroup Language courses ✔
OpenEnglish Language courses ✔ 70
Craftsy Video Tutorials ✔ 23
Udemy Courses ✔ 3+
Coursera Courses ✔ 8-‐12
TeachersPay Teachers Educational Materials ✔ ✔ 71
Selective Aggregator
$454m, (28% of total
VC)
Lynda.com Courses ✔ 100
Pluralsight Courses ✔ 85
Subscription Model Drives the Most Revenue Across both aggregation approaches
0
20
40
60
80
100
120
2012 2013 2014
iVersity (2013/2014 est)
Udacity
EdX
Coursera
Declining VC Investment in MOOCs ($Bn) Initiative Examples
Partner with companies to identify needs
Udemy with 1800-Flowers creates MOOC for florists Bank of America with Khan Academy creates MOOC for consumers Udacity with AT&T and Georgia Tech for Master’s Degree
Partner with university for content
edX with MIT Sloan, Rice and Delfts University
Specialized programs Udacity nanodegrees
Technology partnership
Google and edX to create “Youtube for MOOCs”
MOOCs Tap Corporations to Increase Revenue VC Investment in MOOCs taper meanwhile
Content Structured Delivery Aggregation Engagement Evaluation
Democratization of Content Creation
With cheaper and improved authoring tools and services
Source: The Learning Guild research survey of authoring tools users (1055 respondents , Oct. 2013
Tool Features Free
Captivate (Adobe)
Screen application capture; HTML5; Tin Can
Storyline (Articulate)
Development tool to create mobile learning apps. HTML5
Lectora Inspire
(Trivantis) Screen application capture tool
Camtasia Studio
(Techsmith) Screen recorder and simulation tool
Presenter (Articulate) Powerpoint converter √ SmartBuild
er (Suddenly
Smart)
Web-based authoring tool with HTML5 converter. √
Presenter (Adobe) PowerPoint converter
Service Features
School Keep For instructors:
• Guidance to create online learning videos
• offer “white label” and hosted solutions
Fedora
Skilljar
+
Tools
Services
Content Creation Becomes Easier
Enabling the Rise of the Independent Instructor Independent instructors now earn supplemental income or entire salaries
Source: TechCrunch
>50% Udacity courses created by industry leaders, not traditional professors or
instructors
Top instructors earn >$MM
Platform Average Yearly Income
Top Instructor Yearly Income
Pluralsight 40-50K 10-20X
Udemy 7K 10-20X
Consolidation In Mature Sectors
Content Structured Delivery Aggregation Engagement Evaluation
Given New Sources for Content
Content Growth Addressed by Alternatives Not capitalized by traditional publishers
Source: Veronis Suhler Stevenson, BCG
Publishers Miss Growth of Postsecondary Instructional Materials Market (US, $Bn)
0
2
4
6
8
10
12
Total Market Publisher's Market
2008
2012
Content Sources Examples Approach
OCW Carnegie-‐Mellon, MIT, Apex Learning, K12
Developing digital-‐specific courseware
Self-‐Publishing Flat World Knowledge Tools to build own custom textbook
Open Educa?onal
Resource (OER)
Khan Academy, Be[erLesson, Gooru
Tools to help instructors customize high quality content
Used Books and Rentals Chegg, Amazon Reduces ownership
cost to student
Who? Whom? Sector
M&A 42%
Kroton Educacional S.A.
Anhanguera Educacional
SA
Corporate/Higher Ed
CAE, Inc. Oxford Aviation Academy, Ltd.
Aviation
PLATO Learning, Inc. Archipelago Learning, Inc. Higher Ed John Wiley & Sons, Inc. Deltak edu Higher Ed
NTT DOCOMO ABC Cooking Studio Cooking
Private Equity 55%
Apollo Global Management
McGraw-Hill Education
K-12/Higher Ed
Charterhouse Capital Partners SkillSoft Limited Corporate
TPG Capital
TSL Education Ltd.
Higher Ed
Source: BerkeryNoyes
Leading to Consolidation in Content: $10B in 3 Years Driven by horizontal integration among traditional publishers
Who Whom Primary Drivers
Corporate
57%
SAP SuccessFactors Market entry: HR software into LMS Oracle Taleo
IBM Kenexa
Pearson Certiport Market entry: certification
Non Corporate
43%
Datatel SunGard Higher Education Horizontal
Pearson EmbanetCompass Market entry: online learning
Plato Learning Archipelago Learning Market entry: online learning
John Wiley & Sons Deltak edu Market entry: technology
Providence Equity Blackboard Private equity
Permira Renaissance Learning Private equity
Similar Consolidation in LMS: $20B in 3 Years
Source: IBS Capital Market "Global E-‐Learning investment review"
Driven primary by vertical integration
Mobile “First” Lend to New Learning Experiences
Content Structured Delivery Aggregation Engagement Evaluation
Technology/Service Use Cases Mkt Size (2020, $B) CAGR
Content • Educa=on apps • Aula 365 (Telefonica) • Urban Planet Mobile • (E-‐books)
• Fun, instruc=onal media • Language learning 17 31%
Structured Delivery
• Blackboard Mobile • Download courses, assignments anywhere 1 10%
Open Distribu=on
• MIT’s Educa=onal Collabora=on Space
• Na=onal College for School Leadership
• Help under-‐trained educators
Engagement • Educa=on games • Dreambox • Ultranet
• Gamified learning • Share live field results for feedback 16 38%
Evalua=on • DreamBox Learning • Wireless Genera=on*
mClass • Linkit
• Compliance assessment before entering mines (mining industry)
• Benchmark students across loca=ons
1.5 28%
Technology/Service Use Cases Mkt Size (2020, $B)
CAGR
Content
Education apps Aula 365 (Telefonica) Urban Planet Mobile
(E-books)
Fun, instructional media Language learning 17 31%
Structured Delivery Blackboard Mobile Download courses, assignments anywhere 1 10%
Open Distribution
MIT’s Educational Collaboration Space
National College for School Leadership
Help under-trained educators
Engagement Education games
Dreambox Ultranet
Gamified learning Share live field results for feedback 16 38%
Evaluation DreamBox Learning
Wireless Generation* mClass Linkit
Compliance assessment before entering mines (mining industry)
Benchmark students across locations 1.5 28%
Source: McKinsey, BCG
Mobile Adds Value Across the Learning Process With most opportunity in new learning experiences
342%
270%
239%
234%
232%
226%
226%
223%
193%
177%
175%
145%
News
Travel
Education
Healthcare & Fitness
Lifestyle
Books & Reference
Music
Social Networking
Business
Sports
Entertainment
Games
221
213
212
208
201
185
180
175
174
171
156
136
Business
Healthcare & Fitness
Music
Social Networking
Books & Reference
Entertainment
Education
News
Sports
Lifestyle
Games
Travel
CAGR of free apps* by category 2010-2012
CAGR of paid apps* by category 2010-2012
Source: Strategy analy=cs 2012 download forecast across Apple, RIM, Android and Windows app stores
3rd Fastest
Education Apps is One of the Fastest Growing Segments Across all device platforms
7%
59%
25%
5%
5%
1%
35%
42%
8%
14%
0% 20% 40% 60% 80%
Pre-Primary
K-12
Higher ed
Vocational
Corporate
Expected Mobile Education Spend Relative Overall Spend
Corporations and Higher Ed will Spend More on Mobile Relative to Overall Spend % by 2020
Corporate & Vocational • Caters to segment needs:
flexibility, mobility • New levels of experiential learning
Higher Ed • Underserved markets:
international, late entrants • New forms of social learning
Source: McKinsey, BCG
Some Segments Benefit More with Shift to Mobile Larger spend in Higher Ed, Corporate, and Vocational Areas
Overall Situation in Providers
New Sectors Growth Sectors Sector Consolidation Mature Sectors
Social and Experiential Learning
(e.g. gamification, mobile first)
Aggregation (both selective and open),
Mobile Apps Corporate LMS Traditional Content Publishers,
Assessment
New VC investment Large sums of VC investment; broad adoption
Enterprise HR/talent mgmt. vendors buy standalone LMS
vendors (M&A) Leveraged buyouts
Aggregation is the Growth Sector New opportunities with social and experiential learning
Growing Need for Continual Education
65%
68%
52%
60%
76%
78%
80%
83%
0% 20% 40% 60% 80% 100%
US
India
Brazil
Germany
France
Spain
Portugal
Greece
% of youth1 unable to complete postsecondary and/or find a job that they want
Situation Much Worse in Europe
Unemployment rates as high as 60% (e.g. in Greece, Spain)
Jobs taken by those with experience: • 18% increase in employment in women
aged > 34yrs • 12-14% overall increase for people > 50yrs
High % of Youth Are Struggling to Get Jobs Road to employment has obstacles
1Ages 18-‐24 Source: Labor Bureau of Sta=s=cs, Eurostat, McKinsey Research
42%
45%
72%
0% 20% 40% 60% 80%
Employers
Students
Providers
Agreement that graduates are prepared for the job market, %
Source: McKinsey Research, (8000 respondents in 9 countries, 2012)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Provider perspective Employer perspective
Big gap
Employers Perceive College Grads Lack Skills Which is different from what education providers think
High % of businesses in most countries are SMB (<50 employees), %
99.50%
41%
45%
63%
69%
73%
0% 20% 40% 60% 80% 100%
South Korea
Germany
France
Spain
Italy
Greece
SMBs: <40% happy with level of general skills 60% lack effective training resources
Source: Docebo, IDC, BMO Capital Markets, McKinsey Research
62.27
12.93 9.32
5.71
62.44
15.56 11.47
7.38
0
10
20
30
40
50
60
70
500 10K 25K 100K
SaaS
Local
Cost of LMS per learner is much higher for SMB, $
The Skill Shortage is Felt Most by SMBs Who also resources to effectively recruit and train
Top 10 job titles used by employees today did not even exist 5 years ago1 • iOS developer • social media analyst, • big data architect, • cloud services specialist, • digital marketing specialist
Big data + smart machines = 47% of job categories likely automated next 10-15 years2 • telemarketers • accountants, • retail, real estate sales • technical writers • health technologists
20% freelance economy3
Average job tenure 4.4 years Technology-assisted access to global pool
Increase in New Skills Automation of Existing Skills Changing Labor Mix
3Bersin Deloitte, 2014 1 Linkedin 2Economist, 2014
Technological Changes Exacerbate Skill Gap Amplified by social and regulatory changes
$9,000
$13,950
$14,280
$38,700
$88,120
$0 $50,000 $100,000
3
8
12
18
18
0 5 10 15 20
Stanford University (Masters degree)
Santa Clara University (Masters degree)
University of Phoenix (Online)
Dev Bootcamp (Intense hybrid) *
Stanford Continuing Study (Hybrid) *
Source: Ins=tu=ons’ websites
* Deb Bootcamp and Stanford Con=nuing Study are not accredited programs. But s=ll accepted by many employers
Time Required Cost
Traditional Options are not Often Optimal May fail to address price and lifestyle needs
65% 68% 80%
Creating Need for Education Alternatives For continual education to address skills gaps
Source: Edx, Coursera, Deloi[e research, Economist
MIT courses On EDX
Harvard courses On EDX
Upenn courses On EDX
% of registrants with at least an undergraduate degree 2013–2014
Average age of online learner:
36 years
Stories for Continual Education
Michelle’s Continual Education Driven by changing circumstances
Conferences, seminars
Josh’s Continual Education Driven by desire to learn a new skill to work in
Mary’s Continual Education Driven by need to keep up with trends
4 Types of Learners for Continual Education
4 Types of Learners Differing drivers
Tool Box Personal Enrichment/ Career Advancement
4 Types of Learners Differing drivers
Field Promotion Skill Gap
Resume Builder Degree/License/Certification
Trouble Shooter Project-related issues
2.7 3.4
6.3
10.1
0
2
4
6
8
10
12
14
16
2014 2019
Soj Skills
IT Skills
1 TLSA Survey, 2013 2Babson Research, 2013
23% of employees left jobs citing lack of opportunities for
professional development1
46% of students of online programs cite career advancement
as the primary driver2
Rapid growth of:
Life coaching industry3
$2Bn annually
Self-help books3
$11Bn annually
4.4%
10%
Growth of corporate training content4, $Bn
3Forbes July 2014, “What people are willing to pay for” 4IDC Research
Toolbox Learner Drivers and Motivations
Experience of Learning
For MOOCs 35% of registrants never engaged with the
online content, 5% earned certificates of
completion 2.
1Edsurge.com 2 Forbes.com 3http://venturebeat.com/2013/03/26/babbel-funding
22-year old company, Rosetta Stone, no
longer profitable and loses half its value in 3
years
Given new free alternatives e.g. Duolingo, Anki,
Memrise3,4
Variability in Options
In 2012, over 700 MOOC’s were offered.
Top 5 searches on accounted for only 5%
of all searches. 1
1 Cost 2 3
Toolbox Learner Preferential Needs
4 Yahoofinance.com
Toolbox Learner Preferential Needs
Have to constantly refresh their skills, and are willing to pay for it
Benefits from high return of investment in learning
1-2 Bersin / Deloitte
62% of IT professionals report having paid for
their learning out of their pocket1
2.5-5 year is the half-life of many
professional skills 2
$23,000 average increase in annual income after spending
$13,000 on a 10-week bootcamp3
3Generalassemb.ly blog
Field promotion Drivers and Motivations
Field Promotion Drivers and Motivations
Flexibility in consumption
1 Michaels & Associated Learning Solutions 2 Deloitte University Press 3 Generalassemb.ly blog
1 Quality of content
2 Time sensitive
3
175% increase in the number of graduates from specialized intensive programs, or vocational schools, in the past year. 2
Field promotion Preferential Needs
63% of tech bootcamp attendees are full time employees. 3
65% of e-learners start searching for information on a mobile device. Majority of them switch between devices. Mobile learners get 40 min more learning per week in average because of flexibility. 1
Field Promotion Preferential Needs
1 PMI.org 2 2015 Robert Half Salary Guide
3Labor.NY.Gov / AICPA.org 4US News and World Report 2014
Resume Learner Drivers and Motivations
Higher Income is Expected
CPAs can expect a salary 5%-15% higher than
non-CPAs2.
CPA’s / PMPs must recertify every 3 years /
60 hours of continuing Ed is required1/2.
Need to Attain License / Certification
~130 Licensed occupations certified by
16+ licensing authorities3.
Resume Learner Drivers and Motivations
Accreditation
In 2013 the rise in overall
Online enrollment was 10% YoY 4.
For profit degree were 22% less likely to get a
“callback” than “accredited” applicants 5.
1 Washington post http://wapo.st/1uMaoZE 2 Washington Examiner 3 NY Times http://nyti.ms/167tGSV
1
86% of 2011 MBA graduates found
employment 4
Millennial unemployment rate is 15.5% at April 2015.
(Excludes the ~2M individuals not in) 2.
.
2 Need for Continuing
Ed
3
~2/3s of credentials earned at for-profit colleges are
certificates1.
6% of 2 & 4 year nonprofit universities award
certificates rather than degrees. 3
4 elearninginfogrpahics.com 5 Washington Post
Perceived Opportunity
Resume Learner Preferential Needs
Care about solving project issues
70% of learning is informal and project related1
1 BLS, 1995 Labor survey 2Alexa, 2015
50% of 20 most visited websites in the world are
search engines or information portals2
4Poe=ceconomics, 2014 4DBersin, Deloi[e
Open access monographs growing 40%+ for both books and publishers.3
80% of workforce learning happens
through interactions with peers4
Want options to get answers quickly
Trouble Shooter Drivers and Motivations
Immediacy of Access
1 Huff Post, 2012 2Mashable, 2014
1
Access to Experts
2
Cost
3
People are identifying learning opportunities everyday for little or no cost5
Leverage subject matter experts at work and online communities3 Experts are becoming networked4
Inventing new ways to engage with knowledge (see Reddit.com; IAMA)1 Millennials trust user-generated content 50% more than other media2
3Social Media Explorer, 2013 4Learning Layers, 2012
5Slate, 2014
Trouble Shooter Preferential Needs
Learner type Op?ons Today Opportunity
Field promo=on Lynda, LMS • More skills • Personaliza=on
Tool box MOOCs/OCW LMS
• Soj skills • Gamifica=on for learning • Low-‐cost cura=on (algorithmic)
Resume builder Cer=ficates, extension schools • Badges for other skills
Troubleshooter Google, YouTube • Ac=ve community with content (e.g. templates)
Opportunity for Learner Types Beyond what current options provide
So What?
In Summary
There is a clear opportunity in continual education Field promotion learners: • Most motivate to
close skill gap • Willing to pay
Aggregation is the most conducive model There is a premium on content quality and curation
Diverse Options for Design Content
Category
Type of Design Content Rating on Completeness
UX Visual SW DT
Open Distribution
Lynda ✔ ✔
Coursera ✔ ✔
General Assembly ✔ ✔
Udemy ✔ ✔ ✔
Pluralsight ✔ ✔
Skillshare ✔ ✔ ✔
CreativeLive ✔ ✔
BLOC ✔ ✔
University Program
Parsons ✔ ✔
FullSail ✔ ✔
The Art Insititute ✔ ✔
Industry Program
Interaction Design Foundation ✔
A List Apart ✔
HowU ✔ ✔ ✔
Key Takeaway Opportunity for a well- balanced Course of Study Design Thinking education is very limited
Category
Source of Content Rating on
Quality Own the content
Selective Community of Experts
Partner e.g. university
Open Community
Open Distribution
Lynda ✔ ✔
Coursera ✔ ✔ ✔
General Assembly ✔
Udemy ✔
Pluralsight ✔
Skillshare ✔ ✔
CreativeLive ✔ ✔
BLOC ✔
University Program
Parsons ✔ ✔ ✔
FullSail ✔
The Art Insititute ✔
Industry Program
Interaction Design Foundation ✔
A List Apart ✔ ✔
HowU ✔ ✔ ✔
Key Takeaway Quality is all over the map with no clear leader in this space.
Category
Monetization Adoption
Subscription Individual courses Add On
Open Distribution
Lynda ✔
Coursera ✔ ✔
General Assembly ✔
Udemy ✔
Pluralsight ✔ ✔
Skillshare ✔
CreativeLive ✔
BLOC ✔
University Program
Parsons ✔
FullSail ✔
The Art Insititute ✔
Industry Program
Interaction Design Foundation ✔
A List Apart FREE
HowU ✔
Mone?za?on
Adop?on Category Subscrip?on Individual
courses Add On
Open Distribution
Lynda
Coursera
General Assembly
Udemy
Pluralsight
Skillshare
Crea=veLive
BLOC
University Program
Parsons
FullSail
The Art Insi=tute
Industry Program
Interac=on Design Founda=on
A List Apart FREE
HowU
Content Quality
Evaluation
Reputation Categories
University Program
Peer Grading (Coursera) TA (Coursera) 1:1 Mentoring services (Bloc) Virtual Office Hours (SkillShare)
Industry Program True “Experts” (Interaction Design Foundation)
Open Distribution Broad Range of Topics (Udemy) Higher Reviews (SkillShare)
University partnership (Parsons with New School)
Fully Accredited / Degree Options (Parsons)
Well Known in Industry (HowU)
Differentiators