A new chapter for edtech

In India, “this year, we have already touched more than USD 1bn investment into the edtech segment, and by 2024 it is expected that the edtech market will be more than USD 20bn”, a senior executive from Unacademy commented. With the world’s second-largest population, of which 27% are aged up to 14, there is huge potential to tap into this market. Prior to the coronavirus outbreak, the specialist noted that only about 5-10% of the market used online learning, a figure that now stands around 20-25% – and, out of this, 50-60% are subscribing.

India has both privately run and government-run schools, and it’s in the latter category where there is still much room to grow. “Online learning hasn’t penetrated… the government-school crowd, so they are still untouched in most of the states and cities.” In some of the northern states, about 50-60% of the school population is in this type of school, so “even if [edtech providers] can manage to get 10% and 20% of this crowd on their platform, it will be a huge boon to them because that is a segment that no one has tapped.”

Players in this market include Byju, which, prior to the pandemic, had a tablet-based programme targeting the K12 segment. However, supply-chain disruption caused by coronavirus meant that the company had to switch to online content. Unacademy is Byju’s main competition and primarily focuses on test preparation. However, both of these “are targeting the cream layer of society. They are not focused [on] the bottom-most segment.” Within the device-dependent segment, Byju’s peers include Extramarks and Toppr, which also moved into online content this year. The specialist explained that Byju’s tablets offer a better experience owing to “different sorts of teaching methodologies, that is using animated series or cartoon content”, whereas the others lacked compelling formats.

Australia, in the words of a former APAC head from 3P Learning Ltd, “is an attractive market that’s going to continue to grow.” In terms of the market size, “there are approximately 10,000 schools” and “about 4-4.5 million students”, and, what’s more, the “recent global challenges that we’re all facing with this pandemic, have reinforced the entire online learning environment.” The specialist remarked that, in his experience, enquiry levels for e-learning and online resource companies have been “unprecedented”. Not only has coronavirus created the conditions for distance learning, but it has also opened parents’ eyes to new possibilities. They “have a newfound appreciation of the difficulties of teaching children… they’ve seen the value of that type of teaching.”

3P is one of the dominant companies in this space. Mathletics, released by the company in 2005, was a “pioneering” product at the time, and has maintained a leading place since. “Nothing like that had been seen in the Australian marketplace. It picked up a very captive, curious and interested audience, both parents and school teachers, so it got the jump on everybody else, like all early adopter… technologies.” The company also offers literacy- and STEM-focused products, with the latter particularly in demand recently. Indeed, this “is one of the reasons 3P went down the line and partnered with this leading Texas-based company, Stemscopes, and used their existing IP and… developed a product specifically made for the Australian market.”

However, 3P faces pricing pressure owing to start-ups creating competition, which is not helped by the fact that Mathletics is sold as “a premium product with a premium price” and school budgets are being increasingly stretched. Adding to this, a balancing act is involved in providing cutting-edge content while remaining competitive. “To continue to add value to a product there are development costs, there are content guys, curriculum specialists, designers you’ve got to pay for. 3P has got a very large development team, so it comes at a cost, but, at the same time, you can maintain price integrity and maintain value in the product.”

Another vast market for edtech is China. In addition to the world’s largest population, and a growing middle class, “statistics in recent years show that China has close to 300 million kids in the age range of 0-12, and ever since the introduction of the two-child policy, approximately 18 million babies are born in China annually”, said a former director at Beijing Kaisheng Culture Media Co Ltd (Kaishu Jianggushi). Within edtech, audio content is a subsector that has flourished in recent years. The former director expressed that this is often chosen by busy parents as a productive alternative to screen time: “Children develop logical reasoning and cognitive skills when they are two to eight years old, and stories can help them develop such skills. Children in this age range also have a strong willingness to learn things through stories.”

Although the specialist points to high market penetration, “there is still a shortage of stories, and the sector has yet to grow into a mature industry. There is more room for growth.” Kaishu Jianggushi is one company primed to tap into this. In fact, the company’s listeners surged from about 500,000 in 2018 to over a million during the coronavirus outbreak, and although this figure has reduced since, it still remains elevated. The specialist attributed the sharp increase to the membership business, but also highlighted the company’s high-quality content and how its products develop listening habits in consumers. Unlike a leading competitor, Ximalaya FM, which usually buys IP for its stories, Kaishu Jianggushi focuses on original content. “For the few IP products it has procured, Kaishu Jianggushi shares their copyright with Ximalaya FM… They contribute a considerable share of Kaishu Jianggushi’s sales volume, but the major share still comes from Kaishu Jianggushi’s original IP products.”  

While some may argue that the pandemic is temporarily inflating edtech uptake, it could also be seen as a time for entrenching user habits and laying the foundation for future uptake. And with increasingly affordable technology and advancing internet penetration in many global markets, there is much more potential waiting to be uncovered.