Ed Market to Pass US$5 Trillion by 2018, neXt Advisors
It’s been a while since we have seen this much enthusiasm in the education market. You had a huge Wireless Generation – News Corp. buyout for $360 million earlier in November, paid in cash. While some might say that developing strong education technology solutions and data assessment products is the sign of the coming apocalypse, we believe that this is the advent of the new way to do school.
Some evidence: this interesting report from Michael Moe, at neXt Advisors, saying that the education marketplace will be worth US$5.9 Trillion by 2018. Here are some other quality takeaways from this report:
On the News Corp. buy — “Despite the modern name, cynics were saying that this was going to be another “MySpace Moment” for News Corp. – in other words, buying a trendy asset at a large multiple at its peak. Our take is that this represents an “Inflection Point” (see last week’s neXtup) which signals that the education technology industry is finally going to realize its potential to impact education in a substantial way.”
Money — “Since we had our first Education Innovation Summit at ASU last April, $225 million of financing has occurred along with $367 million in M&A activity. (A Silicon Bubble Shows Signs Of Reinflating)”
Virtual school — “Innovator Dilemma” guru Clayton Christensen estimates that 50% of all K-12 classes will be online by 2019.”
Interesting Mayor of Chicago prediction worth throwing in here. Moe says it will be Rahm Emanuel — “he cost benefits in an era where cost is going to be more closely scrutinized is compelling. Crisis forces change, or as the next Mayor of Chicago Rahm Emmanuel said, “a crisis is a terrible thing to waste.” The Alliance for Excellence in Education did a study showing that an online student costs about $6,500 a year versus over $10,000 in a traditional model. Other studies have shown even more dramatic cost benefits of over 50%.”
Network Effects — “For the first time ever in the school market, “network effects” are being created, accelerated by “freemium” business models. With virtually 100% of all students on Facebook and middle age adults being the fastest growing demographic to adopt social media, the use of technology is becoming as natural as breathing for students, most parents, teachers and administrators. Emerging companies like ePals which has over 3 million global students and 600k classrooms on their collaboration and communication platform, or EdModo which has gone viral in the past 12 months going from zero to over 1 million teachers, are examples of exciting next generation education technology companies.”
There’s much more here. Here’s a screen shot of the report, showing the different segment areas for investment and their projected values for 2011 and 2018.
- News Corp. Buys Wireless Generation in an Education Play (dailyfinance.com)
- News Corp Shells Out $360 Million For Ed Tech Company Wireless Generation (paidcontent.org)
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