Cengage-McGraw-Hill Merger Drives Competition in Education Publishing Sector
The former director explained that the tie-up between Cengage and McGraw-Hill – expected to complete next year – is likely to put an emphasis on Cengage Unlimited, an online subscription package giving students access to all their course materials at a relatively lower cost than other market players.
The merger could also help the two companies cope with competition from smaller ed-tech firms and open educational resources, as well as combating the piracy of course books. Adding McGraw-Hill’s products onto Cengage’s platform would “really put the squeeze on Pearson”, the market leader in education publishing, she said.
In response to the merger, the former director speculated as to whether Pearson could launch its own subscription model to directly compete with Cengage Unlimited. Pearson has “a little time” to assess its strategy, and whether it will continue to lead with quality over price as its main selling point.
As well as Pearson, OERs and smaller publishing houses could also be affected by the merger. Without larger sales forces or the benefit of scale on pricing, companies such as Macmillan and Wiley might have to reassess their approaches, according to the former director.
With tuition costs rising, higher education institutions in the US are competing over a smaller number of students, she said. This made online resources more important to attract overseas students – many of whom could study through these online platforms without moving to the US.
Pearson’s online service had targeted this section of the education market successfully, the former Cengage director said, and others would have to follow its lead to succeed. The US’s higher education market was worth $3 billion, she said, but this could rise significantly by 2025, according to an estimate from education market data provider HolonIQ.
To access all the human insights from Third Bridge’s Higher Education Publishing Update – Cengage, McGraw-Hill & Pearson Interview, click below to view the full transcript.
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