2020 was the boom period for the EdTech industry. Countless startups and initiatives were born. They raised millions. They witnessed unprecedented growth. Big players started investing in those platforms. From billboards to IPL sponsorships, we started believing that online classes are going to stay. Technology pushed visualization and collaboration into teaching so effectively that we accepted online tools are the best means of education. Fast forward to 2022, today is the time for EdTech reckoning. With schools and colleges opening up, the organizations are finding it hard to keep up the market share and maintain their workforce.
Things before Pandemic
Before the pandemic coaching in India was mostly local. Some cities for example Kota and Delhi were considered to be the best place for a specific type of coaching. The locality including PGs, book shops, and food joints were developed around the coaching institutes. Apart from the salary of the teaching staff, and rent for the classrooms, the institutes used to spend a huge amount on localized marketing, like billboards, local newspaper ads, local TV channel ads, etc. For example, before the pandemic, institute A has the capacity of 150 students for classes 11 and 12 each. They charge 50,000 INR per student each year. So the annual income for institute A is 300 x 50,000 = 1,50,00,000. They pay 30% for teaching staff and other salaries (45 lakh), 10% for classrooms and administration (15 lakh), and 30-40% on advertising (60 lakh). The remaining 30 lakh is profit.
The concept of an online classroom
With the introduction of Jio, Indian internet consumption saw an outstanding rise. Opportunities come up where a pre-recorded session can be broadcasted as many times as possible to as many students as possible in every corner of the country. Four immediate visible benefits were
- Teachers and experts can record the sessions with 2-3 months’ salary or with a pay-per-view model. The sessions can be played as many times as possible.
- Students can play and pause the videos as per their comfort, so the same video will work for every student.
- The system doesn’t require a classroom or administration. So operations cost is very less.
- The target audience is much broader. Students from every corner of India are potential customers. The digital advertising cost is also less compared to the traditional options.
The EdTech boom
When the lockdown was announced in April 2020, suddenly the entire education system had to move from offline classrooms to video calls. The technology infrastructure and people were not prepared for this. The EdTech industry saw its opportunity and pressed the accelerator. In 2020-21 the EdTech startups raised billions of dollars. Byju’s becomes India’s most valuable startup at a valuation of 16 billion. Unacademy, another leading EdTech player in the country raised its valuation to $3.44 billion by August 2021.
The simultaneous developments
In the meantime, people around the globe also started creating videos and publishing them on Youtube. Some YouTubers outshined others and started creating their audience organically.
On the other hand, after being pushed to digital, people, especially kids started developing a common understanding of the Internet and using it according to their needs. They know how to search and where to search if they face any issues. They master the art of filtering good content by checking the number of likes or going through the comments before watching the video. I have seen my 12-15-year-old cousins going through the youtube videos for doubts. If you are interested in a subject, the internet gives you the scope of diving deep without putting much effort.
Meanwhile, with massive financial support, the tech startups focused on making their tools more interactive. They started experimenting with different ideas and methods of teaching. They also invested a lot in marketing.
In the last two-three years, the EdTech market looked so lucrative that more and more players and investors jumped in. From class 1 to 12, pre-school, after college, coding to career growth, online MBA, certification, and preparation for Govt jobs, they expanded their reach. This rise in competitors increase the customer acquisition cost, which pushed them toward more aggressive marketing. The sales team started pursuing prospective parents with big promises. Parents enroll with high hopes and in most cases end up frustrating and leaving, because the promises were too high to be met.
Now, with schools and colleges opening up, customer acquisition is going to be even more challenging. Some organizations have started experimenting with hybrid models, mixing online sessions with physical classes. Recently I saw ‘Unacademy’ opening an offline center in Kota.
The current scenario
Right now, there are two types of players. One is the big brands with huge investments and workforce. Second is the Youtubers who have grown their audience organically and created a brand name and trust. They earn through youtube ads or sponsored content.
But, is that it? Are we missing someone? What about Youtube itself? Youtube has millions of videos on literally every topic. The videos are free and available just a search away, anywhere anytime. Plus, one can download or bookmark videos to watch later. If it can raise one ‘Physics Walla’ it can definitely raise a ‘math walla’, a ‘history walla’, or the next ‘Physics Walla’. Teaching online is all about how you can make a topic interesting. YouTube has presented enthusiastic teachers with a massive platform to reach out to the students. In fact, any UGC platform with enough content can be considered an indirect competitor for the subscription-based EdTech industry.
The fact is, online education is going to stay. But it is not going to be mandatory. Therefore, to acquire new students and have steady growth, the quality of content has to play a major role. Only marketing is not going to work in the long run. YouTube with a lot of videos on every topic, directly or indirectly is going to challenge the existing model.
Next, what is the way forward?