Five Major Trends in Online Education for the Second Half of 2015
Lv Senlin, Dean of the Internet Education Research Institute, stated that 2015 is a period of adjustment for online education. Some very promising projects will continue to secure funding, while a large number of small enterprises or companies established just one or two years ago are likely to fail. Xiao Mingchao, an expert in internet trends and marketing, emphasized that teaching content is the core of online education. Therefore, ensuring high-quality, differentiated, and scarce content is the direction for future development in online education. Based on various sources, the main development trends for online education in 2015 are as follows:
1. Transition to Mobile Internet, Moving from Offline to Online
Traditional institutions such as New Oriental, TAL Education, and Xueda Education have begun using mobile internet tools, including social media platforms like WeChat, to interact with students and teachers.
Among them, TAL Education completed a $23.5 million equity investment in Babytree in early 2014 and injected another $15 million into the pan-tech community Guokr.com at the end of the year, aiming to leverage cluster effects to push services online. New Oriental has invested in over a dozen education projects, including both pure online and O2O models.
Bao Yunfan, Vice President of Sunlands Education, stated that since 2008, the company's CEO, Mr. Ou, proposed a strategy of "getting infinitely close to the internet." Since June 2014, all revenue has come from the internet, with no income from offline channels.
2. Large-Scale Acquisitions Will Continue, and a New Round of "Shakeout" Has Just Begun
At the end of 2014, after acquiring the top IELTS education team led by Zheng Renqiang, YY signed a contract worth 120 million yuan with Global Vocational Education Online (i.e., Global Online School) to acquire two of its subsidiaries, making a high-profile entry into online education. In early 2015, Quan Tong Education acquired 100% equity of Online Education Continuing Education Network and Xi'an Xiyue for 1.13 billion yuan, marking a strong start for capital operations in online education.
According to statistics, from January 1, 2014, to February 9, 2015, a total of 12 companies involved in online education mergers and acquisitions were recorded. It is predicted that 2015 will be a breakout year for online education, with listed companies expected to participate in more frequent and numerous M&A cases in this field compared to 2014.
3. Diversification of Profit Models
A report on 2013-2014 China Online Education Trends released by Guotai Junan Securities shows that mobile terminals outperform PC-based online education in areas such as learning progress, voice interaction, offline usability, and interface design. 56% of users are willing to pay for mobile online education apps, reflecting a growing awareness of paying for quality content. Among those willing to pay, over 50% can accept a product price within 10 yuan, which is close to the price range of most paid mobile applications.
Currently, domestic online education profits mainly rely on five major charging models: content fees, service fees, software fees, platform commissions, and advertising.
Chi Yanming analyzed that from a business model perspective, current platforms primarily generate profits through revenue sharing and advertising fees, while educational products mainly rely on charging course fees, essentially moving traditional offline education sales channels and usage scenarios online. Major educational institutions are exploring new profit models based on traditional charging methods.
Yu Minhong, Chairman of New Oriental, believes that online education has various models, one characteristic being that most content is free. However, free models are not sustainable for long-term enterprise development. Future potential profit points lie in providing truly personalized services for parents and students through internet platforms, making these services irreplaceable and thus worth paying for.
4. Mobile Apps Gradually Becoming the Mainstream Model
With the rise of mobile internet, online education is gradually shifting to mobile devices. Many smartphone users have downloaded numerous educational apps, valuing their flexibility, strong operability, anytime-anywhere access, and high interactivity. According to APP STORE statistics, educational apps exceeded 70,000 by the end of 2014, ranking second among app store categories, accounting for over 10% of all apps, second only to gaming apps.
A survey by an institution shows that 56% of users are willing to pay for mobile online education apps, reflecting a good acceptance of paid products. Bao Ta, Vice President of Youdao, believes that the mobile app payment model differs from the one-time high fees of offline education, instead involving low-cost, normalized, and continuous charges.
Some analysts suggest that although institutions like Beida Jade Bird, Sizhong Online School, and 101 Online Education still stick to computers, senior executives from Xueda Education, New Oriental, Sunlands Education, and Yuanfudao have all stated that they will focus on developing app-based online services in 2015.
5. Online Education Gradually Penetrating Second- and Third-Tier Cities
Nan Lixin, Founder and CEO of Cyzone, believes that online education should not overlook opportunities in third- and fourth-tier cities. Huanggang Online School was one of the earliest to start, and they were able to build large sales teams and establish many franchisees in various cities, employing unique strategies.
Shang Junjie, Vice Dean of the School of Education at Peking University, stated that as long as online education can develop in big cities, parents in second- and third-tier cities, and even rural areas, will quickly become aware of it. "Because even without a computer, a few hundred yuan smartphone can access the internet."
Liu Changjue, CEO of 17zuoye.com, noted that entering classrooms in third-tier cities, one can see electronic whiteboards. Even in impoverished mountainous areas, Hope Primary Schools are equipped with computers. This is precisely the opportunity for online education companies. Song Jiajun, President of Liucheng.com, believes that internet platforms can serve a broader target student group. Many students and parents in second- and third-tier cities cannot find good local service resources, and online education can fill this gap.
