This research focuses on the different business models in online education, the growth and consolidation of certain segments , democratization of content creation, and learner needs in corporate education
3. 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
4. The Rise of the Aggregation Segment
Content
Structured
Delivery
Aggregation Engagement Evaluation
5. 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
6. 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
7. 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 $150 for
college credit
Edx 2012 150+ 1.6MM Free
8. Most VC Investments in Open Distribution the Last
3 Years (New business models emerge to capitalize on trends)
Company ($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
TeachersPay
Teachers
64 K-12 ✔ 3.4m
Remind 60 K-12 ✔ 10m
Udemy 48 All ✔ 10m+
9. 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
11. Category Company
Content Source Platform Services Evaluation
Own
Content
Open
Community
Authoring
Tools
Expert-
Curation
Algorithmi
c Curation
Social
Features
Testing Analytics
Open Aggregator
$538m
(33% of total VC)
TutorGroup
OpenEnglish ✔ ✔ ✔ ✔ ✔
Craftsy ✔ ✔ ✔ ✔
Udemy ✔ ✔
Coursera ✔ ✔ ✔
TeachersPay
Teachers
✔
Selective
Aggregator
$454m,
(28% of total VC)
Lynda.com ✔ ✔
Pluralsight ✔ ✔
Importance of Curation
Open vs. Selective Aggregation
12. Category Company Focus
Monetization
Rev
($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
$454m,
(28% of total
VC)
Lynda.com Courses ✔ 100
Pluralsight Courses ✔ 85
Subscription Model Drives the Most Revenue
Across both aggregation approaches
13. 0
20
40
60
80
100
120
2012 2013 2014
iVersity (2013/2014 est)
Udacity
EdX
Coursera
Declining VC Investment in MOOCs
($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
15. 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
16. 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
18. 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
19. 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
20. 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
21. Mobile “First” Lend
to New Learning Experiences
Content
Structured
Delivery
Aggregation Engagement Evaluation
22. 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
23. 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
24. 7%
59%
25%
5%
5%
1%
35%
42%
8%
14%
0% 20% 40% 60% 80%
Pre-
Primary
K-12
Higher ed
Vocation
al
Corporat
e
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
26. 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
28. 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
29. 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
30. 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
31. 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, 20141 Linkedin
2Economist, 2014
Technological Changes Exacerbate Skill Gap
Amplified by social and regulatory changes
32. $9,000
$13,950
$14,280
$38,700
$88,120
$0 $50,000 $100,000
3
8
12
18
18
05101520
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
33. 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
39. 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
40. 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
41. 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 Cost2 3
4 Yahoofinance.com
Toolbox Learner
Preferential Needs
42. 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
43. 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
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
44. 1 PMI.org
2 2015 Robert Half Salary Guide
3Labor.NY.Gov / AICPA.org
4US News and World Report 2014
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
45. 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” applicants5.
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
46. 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
47. 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
48. 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
50. 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
52. 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
53. Category
Source of Content
Rating
on
QualityOwn 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.
54. 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 ✔
55. Content Quality Evaluation ReputationCategories
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)
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