If the US is the world’s education technology leader, Asia is fast becoming its most critical testing ground. The reasons are unambiguous: Asia has the world’s largest pool of K-12 and college enrollments with acute needs for further educational access; deep internet and social media penetration; hypercompetitive examination systems and a wide dispersion of household affordability.
Yet the most profound impact from Asia’s education breakout is going to be felt on many US-based education companies, universities, investors and entrepreneurs who are operating today in what is arguably a mature but relatively low-growth American market.
Consider a recent list of EdTech’s “most loved” companies in the United States: more than half depend on global students to drive revenues. The MOOC value proposition of low cost or freemium access is unquestionably global and borne out by early enrollment and revenue trends at Coursera, EdX, Udacity, Udemy and, at the elite end, Minerva. Language Learning startups Open English, Duolingo and others are tied to future Asian and global student demand to gain any reasonable scale (indeed the largest funding round for a language learning start-up was the Chinese investor-led $100 million round for the China-based Tutor Group). Adaptive learning innovator Knewton, in announcing a recent partnership with Chungdahm Learning in Korea (not to mention the very rationale in having the international fund Atomico lead their Series B round), signaled both its nascent expansion into Asia as well as the limitations of its own home market.
And these trends will only accelerate as Asia emerges as the epicenter of global education.
First, Asia's education markets dwarf American levels by a magnitude of 10 times the number of K-12 enrollments at over 600 million. According to an OECD report, of the 204 million 25-34 year olds with a tertiary education in the world by 2020, Asia will account for well over 55% of them, with China and India accounting for 29% and 12% of degree holders, respectively (notably, the US is predicted to lag behind India at 11%).
Second, Asia is now the fastest-growing e-learning market in the world with outright leadership in a number of key areas, including games-based, mobile and social-based learning.
- Asia will account for 23% of the self-paced e-learning market (estimated $53 billion revenues worldwide) by 2018 and seven of the world’s top ten fastest growing e-learning markets: Vietnam, China, Thailand, Malaysia, Indonesia, Myanmar, Nepal and Pakistan.
- Its mobile or M-Learning market will rocket from US$2.3 billion in revenues for 2014 to $12.3 billion by 2020, an increase of almost 4.5 times.
- The $247 billion global language market demand continues to be buoyed by Asian student demand.
- Asia will drive an estimated 64% of global games market revenue and 27 per cent of the global simulation-based learning market (“serious play” games) by 2017.
Third, pressure on Asian governments to create jobs is immense, unleashing vast opportunities for education-to-work and skills-based platforms. Working age (16-64 year) populations will expand rapidly to the year 2050 with the most profound "worker bulges" occurring in countries of South Asia--specifically India, Pakistan, Bangladesh—all of which suffer from low educational attainment.
Fourth, as global research and development shifts to Asia, so will the needs for higher-order human capital, setting the stage for a larger regional carve-out of the estimated $300 billion corporate training market, withmuch of it delivered online.
Fifth, Asia’s education ecosystems are addressing specific market failures with their own solutions that offer deeper local context, user interface, and lower cost structures than many US education ventures can offer.
Venture capital activity reached a record $14.2 billion in 2014, with corporate investors such as Xiaomi, Alibaba and CITIC in China, Wipro in India, and education giant Benesse in Japan headlining key education investments. Edtech start-ups are everywhere: from adaptive learning platforms KnowRe and KungFu Math to social learning networks Kelase, Zenius, Brainly and ClassDo; vocational MOOCs Uniquedu, Guokr, Geek College, and DeltaViet; exam platform Rankjunction, early education groups QLL, RevoTech and Taamkru; and test preparation companies Mana.bo and Rockit Online.
Asia’s shrewd localization and creation of new technologies has historically brought forth waves of local companies, from well-connected start-ups to opportunistic conglomerates, that end up seriously challenging foreign entrants. This is now happening in education.
So here’s a succinct memo to education investors and entrepreneurs in the US: your chances of “putting a dent in the universe” will increasingly require conquering Asian markets first.