Part II – I Overview of Online Primary and Secondary Education
I. Definition of online primary and secondary education
Online education means a form of education characterized by the access to the Internet to voluntarily choose learning content at any time any place. Compared with the face-to-face teaching, it breaks the spatial and temporal limitations on education. It is the teaching activity, which is organized not face to face and in which students and teachers are separated, and a cross-school and cross-regional teaching model.
In this book, “online education in primary and secondary school” is defined as a teaching model improving the efficiency and effect of such teaching links as teaching, examination and mentoring for primary and secondary pupils with the help of computer or Internet (including mobile Internet) technology.
II. Main features of online primary and secondary education
- Polarization of companies and fierce competition
The online primary and secondary education market is mainly featured by the fact that many companies are optimistic about online education. The investment into online education has increasingly boomed since 2012, leading to the appearance of thousands of new projects in the field of primary and secondary schools.
In addition to such companies as 17zuoye, Yuantiku and Tiguwang that have an investment scale of more than one hundred million Yuan, many other companies also enter this industry, e.g. NetDragon, LANXUM, Qtone and other listed companies. And Aixuetang and Gaosi Edu that have the financing of hundreds of millions of Yuan later become the best.
It seems that the threshold of online primary and secondary education market is low, but in fact, it is very high. The reason is that the separation between customers and users leads to low acceptance of online education by parents, little time spent by students as users, always high content development cost due to various versions of textbooks. Another important reason is the costly channel marketing.
- Mixed classification and product model mainly including micro course, question bank and online answering
Projects centering video and micro teaching are the big player among online primary and secondary education projects, suggesting that online education has unmatched advantage in transmitting quality teachers’ resources. But video course development costs too much with the average teaching cost per class hour (40mins) by quality teachers of above 1,000 to 1,500 Yuan and the quality cartoon course cost per class hour of more than 0.2m Yuan, and it takes long time to accumulate quality video resources, so the threshold is set high. The quality of content resources is the lifeline of online education, so there is a strong market demand.
Unlike video and microteaching, question bank and answering have surprisingly become new projects. In particular, the high-profile entry of Yuantiku into intelligent question bank has made online question bank become the hotspot in online education. Moreover, mobile App-based answering services have emerged one after another, e.g. Aifudao, Xueba100, HAPPYSTUDY, Aikaola, etc.
- Constantly emerging new technologies or models
Online education technologies have remained stagnant for a long time on account of too little input into technology, mainly because no attention is paid by big capital to online education market. For example, courseware technology has always put focus on three-separated-part screen and aided by Flash, suggesting that advanced technology is not popularized in this industry.
Thanks to the input of large capital, new technologies and ideas flood endlessly. Intelligent assessment or photographing and questions search technology that has gained popularity in recent years makes it possible to improve technical weakness facing online education soon. For example, recent years see the significant development of intelligent essay correction or voice assessment technology, which has gradually been put into use. Kouyu100 has had 6m users and been traded on the new OTC market.
- A great majority of companies densely based in first-tier cities including Beijing, Shanghai and Shenzhen, and remarked increase in the number of such companies in second-tier cities
It can be seen from the above chart that Beijing is home to the most online primary and secondary education companies, followed by Shanghai, Shenzhen, Guangzhou and others. That is because Beijing enjoys the favorable geographical position as China’s Internet and education center. High housing price sharply drives up the human cost in Beijing and rapidly-developing education industry pushes up the cost of scare educational resources such as teachers.
It needs to be noted that online education companies have also appeared in such second-tier cities as Nanjing, Suzhou, Hangzhou, Changsha, Wuhan, Dalian, Chengdu, Shijiazhuang, Zhengzhou and other places, but in the past, such businesses did not exist. However, most of such companies are small-sized ones that employ less than ten persons and far fall behind their counterparts in Beijing and other places in the aspects of concept, technology and talent. But lower human cost will attract many large-scale companies to settle in second-tier or third-tier cities.
- Many companies not making profits
Only a few online primary and secondary education companies make profits, such as CHINAEDU.COM, Etiantian and Jd100, and many such firms make a few profits or do not make profits. But that does not mean that online primary and secondary education is not profitable. From the perspective of current trend, O2O model has the greatest chance to make profits first, and as for projects operating with the pure “thinking of Internet”, the profit-making cycle will come three to five years later.
III. Analysis on commercial model of online primary and secondary education
Online primary and secondary education can be divided into three categories by targeted customers. The first is the educational digitalization market aiming at public primary and secondary schools (including some private ones) with the commercial model of B2G—corporate products and services are procured by bureaus of education or schools. The second is B2C model targeting non-institutional students’ parents – paid by students and parents. The last is the B2B model targeting training institutions or publishing houses.
B2G and B2C differ greatly in product, but they also overlap. B2G is mainly targeting educational digitalization industry, with products made to solve digitalized teaching problems in school education, such as resource database, item bank, teaching platform, recording room, electronic white board, micro course and others, some of which are incorporated into the program of “three communications and two platforms”.
The institutional primary and secondary educational digitalization market reaches one hundred million Yuan each year, and contains both hardware and software. With the thinking of “focusing hardware while ignoring software” always existing in the education industry, hardware dominates this market. An increasing number of software has been purchased in these years as more and more IT is applied to the education industry.
Online primary and secondary education enterprises that adopt B2G have risen rapidly with the development of online education. The number of such firms is now estimated at about 1,000-1,200, represented by Xk, Xueleyun, Aixuetang, iFLYTEK, Pigai, 17zuoye, Kouyu100 and others. But with the limited effect of educational system, a great majority of institutional enterprises mainly occupy the market in some provinces, so there is no monopoly in the market nationwide.
B2B is formed mainly specific to education and training institutions, publishing houses and others. About 600-700 companies, such as Master Mind Education, New Sharing and others, as well as some primary and secondary education publication services companies adopt this model for procurement.
B2C is formed mainly to meet parents’ expectations of improving primary and secondary students’ performance or solve primary and secondary students’ problems relating to learning (e.g. photographing and answers search). So its products are designed to solve a problem, including micro course, online answering, online broadcasting and others, as well as such companies as Etiantian, Xueersi, Xueba100, Afanti, Yuantiku, Xuexibao, Eebbk and others.
Unlimited by the institution, products aimed at students and their parents have a very low threshold. In recent years, B2C has become popular with the boom of online education. At present, there are about 1,200-1,400 companies using this model.
The number of companies that have a diversified commercial model – a combination of the above-mentioned three models, is lower than that of companies that adopt the aforesaid three models and amounts to about 2,200-2,400.
This is a series of articles from Blue Book of China’s Online Education Industry, authored by our partner China Online Education Research Institute (COERI). Each post is a chapter from the blue book.