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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
EducationÌý isÌý likelyÌý theÌý mostÌý importantÌý investmentÌý inÌý anÌý increasinglyÌý intellectualÌý economy,ÌýÌý inÌýÌý ourÌýÌý viewÌýÌý (seeÌýÌý ourÌýÌý relatedÌýÌý globalÌýÌý Q-SeriesÌýÌý report).ÌýÌý AccordingÌýÌý toÌýÌý Euromonitor,Ìý globalÌý spendingÌý onÌý educationÌý amountedÌý toÌý U$5trnÌý inÌý 2019Ìý (6%Ìý globalÌý GDP),Ìý yetÌý educationÌý isÌý significantlyÌý under-representedÌý inÌý theÌý capitalÌý market.Ìý AsÌý advancesÌý inÌý governmentalÌý policy,Ìý technology,Ìý andÌý businessÌý modelsÌý areÌý redefiningÌý theÌý educationÌý valueÌý chain,Ìý andÌý COVID-19 ÌýisÌý spurringÌý 1.5bnÌý children to adapt toÌý onlineÌý learning,Ìý weÌý believeÌý aÌý newÌý educationÌý eraÌý isÌý comingÌý ofÌý age.Ìý HowÌý willÌý onlineÌý education create multi-decade investment opportunities?
WeÌý thinkÌý onlineÌý educationÌý isÌý well-positionedÌý toÌý addressÌý theÌý scalability/affordabilityÌý 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 ofÌý ÃÛ¶¹ÊÓƵÌý EvidenceÌý Lab globalÌý consumerÌý surveysÌý andÌý mobileÌý trackersÌý showÌý pickupsÌý inÌý onlineÌý consumerÌý preferenceÌý andÌý usage,Ìý likelyÌý spurredÌý byÌý 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-formalÌý educationÌý toÌý buildÌý upÌý criticalÌý massÌý online,Ìý withÌý moreÌý to-customersÌý (2C)Ìý models, and reach US$213bn in 2025E. For formal education –ÌýÌý the lion’s share of total educationÌý spendingÌý –ÌýÌýÌý weÌý expectÌý offlineÌý public/not-for-profitÌý (NFP)Ìý formalÌý educationÌý institutionsÌý toÌý adaptÌý toÌý learners’Ìý changingÌý preferencesÌý byÌý providingÌý partial/fullyÌý onlineÌý programmes.ÌýÌý WeÌýÌý findÌýÌý meaningfulÌýÌý upsideÌýÌý (2025EÌýÌý revenue:ÌýÌý US$217bn)ÌýÌý forÌýÌý to-business/to-governmentÌý (2B/2G)Ìý companiesÌý thatÌý facilitateÌý thisÌý onlineÌý transition.Ìý WeÌý 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.