Learn as you lounge: coronavirus lockdowns have driven up demand for online courses
Learn as you lounge: coronavirus lockdowns have driven up demand for online courses

Disruption is the goal of many technology start-ups. But, in the education sector, a number of tech ventures are building businesses based on helping — rather than competing with — schools and universities.

These online education platforms — such as Coursera, 2U, Udacity and FutureLearn — originally started out with utopian visions of free learning through bite-sized tutorials, known as massive open online courses (Moocs). Some Moocs proved hugely popular, but high dropout rates and the difficulties of monetising this learning convinced the platforms to form partnerships with universities instead, to run paid-for courses with them online, and share the revenue.

As a business model, it had been gaining traction before the coronavirus pandemic hit. However, the lockdown of campuses and people’s desire to retrain during a time of turbulence in the jobs market has driven up applications significantly in the past 12 months.

Among the attractions of these online education platforms is their ability to serve students around the globe, which has encouraged some business schools to go all out with a digital approach.

Gies College of Business, part of the University of Illinois at Urbana-Champaign, partnered with the Silicon Valley-based Coursera in 2016 to provide an entirely online MBA programme — winding down its campus-based MBA course in the process. Its iMBA now has almost 4,000 students, up from an intake of 114 in its first year. Each pays just under $22,000 in tuition fees — far less than the six-figure sums required for the highest-ranked campus-based MBA programmes but more than other online MBAs.

Brooke Elliott, associate dean at Gies College: ‘[Coursera] want to scale and so do we’
Brooke Elliott, associate dean at Gies College: ‘[Coursera] want to scale and so do we’

Coursera is enabling the school to reach countries and candidates it could never have got to through its own marketing efforts, according to Brooke Elliott, associate dean at Gies.

“Our goals were aligned with Coursera because they want to scale and so do we — in our case, to achieve our mission as a public university of providing the broadest access to education,” she says. A further benefit, Elliott adds, is that Coursera’s global network of learners and business partners provides insights into what Gies should be teaching.

Although alliances with online platforms have enabled schools to save money on developing in-house digital teaching tools, Elliott says Gies has had to make a significant investment in online learning itself. This has been needed to create the content — by building four production studios and employing a 39-person “e-learning” team to develop course material — and to retain all the intellectual property in the teaching.

Global audience

Rival platform FutureLearn has also been capitalising on the shift to online learning. Founded in 2012 by the UK’s Open University, it now has partnerships with more than a quarter of the world’s top higher education institutes and business schools.

When it signed the first of these, in 2015, management and business courses were the third most popular course category on the platform. Now, they are number one.

“We help our partners reach audiences and markets that perhaps they cannot on their own,” says Justin Cooke, FutureLearn’s chief content and partnerships officer, noting that the platform’s business and management courses attract more women than men, unlike most leading MBA courses.

See the full 2021 Financial Times Online MBA directory as well as the whole report on Monday March 22

“We are a marketplace with 15m learners from every country in the world,” Cooke says. “Even a world-class business school is not reaching that size of audience.”

But while business schools have been quick to embrace platform tie-ups, they are also aware that their campus-based teaching models have plenty of life in them yet.

HEC Paris started teaching a fully online MSc in innovation and entrepreneurship using Coursera in 2017. Its associate dean of executive education, Anne-Valérie Corboz, says: “The important thing for us is to build partnerships outside our campus walls.” Nevertheless, while she praises the “flexibility and adaptability” of the online model, she adds: “Online education is not recession proof and it will not replace our teaching offline.”

Investors wanted

Indeed, for all the growth in online learning, the platform model has still to prove itself. Individual platforms continue to compete with each other to sign up educational institutions, and emerge as a “winning brand” in a market that looks ripe for consolidation.

Some believe investment will be key. This month, Coursera announced a plan to raise up to $100m through an initial public offering on the New York Stock Exchange. Founded in 2012 by two Stanford computer science professors, it now boasts more than 77m registered learners and 200 partners across higher education and industry.

But not all of its users choose to pursue — and pay for — degree certification after consuming free course content, which leaves Coursera with a mixed story to tell investors. In 2020, sales rose 59 per cent to $293.5m year-on-year, but losses also grew by 43 per cent over the same period to about $66.8m — and the company said it would continue to post losses for the foreseeable future. FutureLearn is also lossmaking and has not set a date for turning profitable, Cooke says.

None of this is unusual for an online growth business. It is, however, a sign of how much money may be needed to make online education — as a business model — work out.

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