BackAfter initial spike, online edu startups face falling revenues
Traffic at some leading online education providers has increased by more than 50%According to a KPMG report, education spending will rise to $1.96 billion in 2021 from less than $250 million in 2016
PremiumMUMBAI: After schools and colleges across the country shut down earlier this month, some online education startups were expecting hordes of parents and students to flock to their platforms. A few weeks later, while user traffic across education startups has surged, revenues have actually dropped, entrepreneurs said.
Traffic at some leading online education providers has increased by more than 50% as parents and students desperately seek to avoid disruption in learning. But as uncertainty increases around domestic entrance exams, overall education spending is declining.
“Our traffic has increased this month by 1.6 times and we think that people will not stop spending on education even in these times," said Akshay Chaturvedi, co-founder and chief executive of Leverage Edu, a startup that offers career guidance to students and connects them with universities.
"But there are cases where people who are worried about their jobs or their family businesses may choose to hold back spending for 2-3 months to see how the situation evolves," Chaturvedi said.
Before the coronavirus outbreak, education startups led by Byju’s had become favourites of venture capital investors who had bet on a boom in online education for many years to come. According to a May 2017 report by KPMG, education spending will increase to $1.96 billion in 2021 from less than $250 million in 2016.
As the virus started spreading quickly in India in March, some education startups launched marketing campaigns to either capitalise on the moment or save their revenues from declining.
On 11 March, $8 billion-valued Byju’s said it would offer all its learning programmes free of cost on its app till the end of April. This covers programmes for classes 1-12. Last week, Byju’s splashed crore of rupees on front-page newspaper ads to attract users.
User traffic has surged by 60% since the company opened up its app on 11 March, said Divya Gokulnath, co-founder Byju’s, in an email.
“As a testimony to the potential of online learning platforms serving as a support system to the student community, students from metros and non-metros are accessing the lessons on the app to revise crucial concepts and learn new concepts across grades to get themselves ready for the coming year," Gokulnath said.
She did not comment on whether Byju’s revenues had declined this month.
On 18 March, Unacademy, India’s second-largest education startup, said any educational institution across India could use its platform to conduct classes free of cost “till the situation improves." The company also launched an online marketing campaign, signing up with film director Karan Johar and former cricket Virender Sehwag to promote its platform.
Unlike entertainment platforms like Netflix, Hotstar and Amazon Prime, which have seen a huge spike in both subscriptions and usage, the impact of the virus on education startups is likely to be mixed. Though the education sector is unlikely to see a major slowdown, startups will have to make changes to their business to adapt to the disruption caused by the virus.
For instance, some startups including Byju’s rely on a large sales force to visit people’s homes and sell their products. Because of the lockdown to contain the spread of the virus, this way of selling has become untenable. Additionally, there is little certainty around the timing of important entrance exams, through which some startups generate revenues.
“Everybody will have to adapt their business," Leverage Edu’s Chaturvedi said. “We’re focusing on our live-learning platform, which was earlier a small part of our business. As people are home, there is an increase in interest in GMAT, GRE, TOEFL and other test-prep services that we have on the live-learning platform. Over the past week, a lot of universities have also been pushing their online programs on our platform. They are fearful about how long this will last and they need some business continuity," he added.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
