Written by Assaf Gilad and Grady Berk
The concept of receiving an education without physically being in a classroom has been around since before the radio era, with “distance learning,” where individuals would receive courses or lessons in the mail. But it seems that only now, 20 years after the internet revolution, attending online academic courses or completing a Stanford degree at home became somewhat possible, practical, cheap, and socially acceptable.
With the introduction of massive open online courses (MOOC) services such as Coursera, Udacity, Khan Academy, edx, NovoEd, and Iversity, high-education could reach tens of millions of learners around the globe. MOOCs are actually a specialized type of marketplace for online courses. They are platforms designed to aggregate content from a variety of publishers, including universities and training providers. The scalability of these platforms has been very beneficial to many organizations looking to educate and train employees in various settings.
Andrew Ng and Daphne Koller, founders of Coursera
Coursera is considered to be the pioneer in democratizing degrees from top universities such as Stanford, Yale, Johns Hopkins, Duke, Brown, and U-Penn. Founded in 2012 by two Stanford computer science professors, Andrew Ng and Daphne Koller (both have since left the company), Coursera is now offering nearly 2,100 courses and serves as much as between 20-24 million students.
Coursera also pioneered a freemium model in which courses have the ability to be audited and taken for free. Learners who want certifications of completion pay fees ranging from between $29 – $99 per course. In addition, there are over 160 specializations offered by Coursera ranging from between $39 – $79 per month. If you want to go as far as applying for the online degree programs, they are priced between $15,000 – $25,000. The degrees require 1 – 3 years of study and are fully recognized and accredited. And, if you have any financial issues, Coursera can provide you with a loan, if that is what will help you complete the courses.
Computer Sciences and Personal Development
Based on a survey that was conducted by Zirra for a research report on Coursera, Computer or Data Science, Personal Development, and Business are the most popular subjects for online courses. Additionally, Law, Photography, Education, Engineering, English, and Mathematics rank highly with our respondents.
These findings correspond to the five most popular courses offered by Coursera in 2016: Learning How to Learn (UC San Diego), Machine Learning (Stanford University), Programming for Everybody (University of Michigan), R Programming (Johns Hopkins University), and Speak English Professionally (Georgia Institute of Technology).
Coursera’s competitive landscape. Source: Zirra
Zirra’s research report also found that the MOOC market is fragmented. A survey we conducted found that the most popular platform, with over one-third of respondents agreeing, is courseware offered directly by a university. In fact, nearly two-thirds of respondents who have taken online courses show no distinct preference for a particular platform. Most users seem to look for the for the courses or certifications they need, along with a good learning experience at an affordable price.
Coursera is the 2nd most used among respondents, following Khan Academy which focuses on k-12 students. Furthermore, nearly half of respondents claim to have used some other platform, including BlackBoard, Creativelive, Kelby one, Distance CME, FEMA, RedVector, ASCE, UUS Army War College, AAMD, ASRT, The Learning Center, w3schools, selfhtml, DPS, Skillsoft, and Masters dot com. Outside of the U.S. each dominant player focuses on other regions, with examples including FutureLearn (UK + Europe), Iversity (Germany), XuetangX (China), and Rwaq (Saudi Arabia).
Among the competitors, three are notable:
Udacity – was founded as a MOOC by a Stanford professor but pivoted to sells individual courses directly to consumers, primarily to people looking for careers in digital fields. Recently, Udacity got extensive media coverage, thanks to the courses it offers in the hottest tech areas such as self-driving cars, deep learning, A.I, data science and machine learning, and thanks to its partnerships with the hottest companies in teaching their developers communities, such as Facebook and Google. This has won the company’s fame as the “University by Silicon Valley”, a service that teaches the actual programming skills that industry employers need today. Udacity has been rumored to be valued at $1 billion, and has already spun-off a company that develops a self-driving taxi.
Khan Academy – was founded as a YouTube channel with math videos, and is historically primarily creating content for k12 students. While all content is free, Khan Academy is now monetizing through partnerships (e.g. Bank of America, Disney) and selling curricular tools to schools.
Udemy – Udemy is a courses marketplace that allows anyone to create and offer online courses at any price point. The result is that Udemy has one of the broadest catalogs of courses, but the quality varies significantly. Udemy’s advantage is that they are able to get courses on new topics faster than any other platform. Udemy also has the least advanced pedagogical model of all these players, as it is limited to lectures and quizzes, with limited options for course innovations.
Coursera’s competitive landscape. Source: Zirra
The Boredom Paradox
A major challenge of the online learning market is to reverse the dropout trend and low completion rates. The Industry sees a very high dropout rate of 93%, according to the research. This industry, probably, suffers from the usual Gartner Hype Cycle. Back in late 2011, when eLearning was dubbed ‘the next big thing’ with the potential make eLearning available to basically everyone, no one anticipated the problems we see today. It turned out that users found the courses boring and difficult. Boring because they were watching a pre-recorded video with no possibility to interact with others. Difficult because there was no one to consult when they met obstacles. As a result, most users still don’t finish the course they sign up for. The biggest challenges of online courses platforms are to move from the idea that we can replicate the physical classroom to an understanding of e-Learning as something else, a space that needs to be designed based on the needs of the individual user.
Individuals in the United States do not spend much money on education outside of degree programs. The result is that MOOC providers are seeing declining enrollment and very low willingness to pay. That’s why they are trying to create new degree-like programs, but these have not yet been taken up in the market. One of the remedies for the flaws of the B2C model is a B2B model or partnering with corporations to provide training to their employees or community members.
guilossio / Pixabay
Corporate Training Rush
As demonstrated by Udacity’s extensive media coverage, the thrust for skills training in defined technologies is taking over enterprises. That is a great solution for organizations that have a hard time recruiting new talents. Instead, they focus on their employees, teaching them new skills.
In 2015, it was estimated that roughly 8% of companies use MOOCs for corporate training, while another 7% consider experimenting with MOOCs. One of the major growth in the market is with corporate customers who have already integrated Coursera’s abilities. The demand for services which Coursera is offering is expected to triple in the next two years, with 28% of companies using MOOCs.
There is an increasing trend for online learning companies to partner with enterprise and legacy companies such as Google, AT&T, GE, IBM, Accenture, Credit Suisse, Mercedes-Benz, Instagram, Shazam, and nVidia. Additionally, there is competitive risk coming from similar online training programs as well as career-focused boot camps such as Codecademy, Skillshare, Udemy, Shaw Academy, and CanopyLAB.
Coursera’s estimated valuation. Source: Zirra
Acquiring Education is Costly? Acquiring a User is Costly
The MOOC platforms are still looking for sustainable business models. Most got their early start offering free courses to consumers, but now they have taken on a number of approaches to monetize, including selling paid courses, offering “freemium” services (verified certificates, etc), offering bundled certificate programs (Specializations, MicroMasters, Nano Degrees), subscription packages, and offering the platform for private use.
In many cases, although they have found effective revenue models, they haven’t found a way to acquire users cost effectively. In other words, for a $200 course, it might cost over $200 to acquire that user, in large thanks to the high dropping rate. In the enterprise side, there’s a similar challenge to drive awareness of new offerings and reduce sales cycles.
There isn’t a shortage in the number of players in the e-learning area. But those who will survive are the companies that have established efficient cost models and have enough brand equity to drive demand cost effectively. New innovators must come from either finding a niche, challenging the methods of online learning, or a new way of facilitating learning which is centered on users.
This article is based on a Zirra Deep Report. If you wish to get a Deep Report on a startup company, contact us here