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Consumer Services
Education is likely the most important investment in an increasingly intellectual economy, in our view. How will online education create multi-decade investment opportunities?
Future reimagined: The US$5trn education market coming of age
Education is likely the most important investment in an increasingly intellectual economy, in our view (see our related global Q-Series report). According to Euromonitor, global spending on education amounted to U$5trn in 2019 (6% global GDP), yet education is significantly under-represented in the capital market. As advances in governmental policy, technology, and business models are redefining the education value chain, and COVID-19 is spurring 1.5bn children to adapt to online learning, we believe a new education era is coming of age. How will online education create multi-decade investment opportunities?
We think online education is well-positioned to address the scalability/affordability limitations of offline education and the rising demand for lifelong learning in the fast-evolving world economy. In this report, we analyse the China and US online education markets as case studies on how online education could play out globally. The full suite of 鶹 Evidence Lab global consumer surveys and mobile trackers show pickups in online consumer preference and usage, likely spurred by COVD-19. We expect this to be only the beginning of a seismic structural shift.
Despite being a fraction (about 9% in 2019) of global education spending, we expect non-formal education to build up critical mass online, with more to-customers (2C) models, and reach US$213bn in 2025E. For formal education – the lion’s share of total education spending – we expect offline public/not-for-profit (NFP) formal education institutions to adapt to learners’ changing preferences by providing partial/fully online programmes. We find meaningful upside (2025E revenue: US$217bn) for to-business/to-government (2B/2G) companies that facilitate this online transition. We expect online education to add a US$94bn new revenue opportunity to the value chain, most notably in advertising, cloud services, data centres, hardware, and software.