We've found a chart that is just terrific. Some infographics allow a quick realization. Others, like the one below, give tremendous insight and require a bit more study. Analyzing the investments being made in Massive Open Online Courses (MOOCs) produces a complex set of information. This well-done infographic digests a vast amount of data into something fun to look at and learn from. The chart below, published in the Chronicle of Higher Education, shows a number of very important trends and concepts for the future of higher education.
- In general, we find it amazing to see the high level of attention MOOCs have received in comparison to the actual investment level in this space from university budgets and investments made by other education-related companies. With the exception of edX, we don't think that the true investment level is reflected in the chart below since the education and course providers bear the real cost of creating the content.
- The chart below highlights the connections between the non-profit world, universities and the for-profit-world. These connections will increase in the future. For a long time, wealthy donors have played a critical role funding new university programs and facilities. Consider the names of several of our universities and departments, i.e., Stanford, Carnegie, the Johns Hopkins Bloomberg School of Public Health. Yet we believe that beyond Venture Capital, major education companies, vendors, and other financiers will be even more prevalent in the future. We believe they will create on-going business arrangements to provide a range of student-focused services allowing universities to focus on the teaching and research. Consider increasing moves toward outsourcing food services and housing. In the international education marketing, we see arrangements with Kaplan, INTO, and others, to fund marketing and whole "transition" programs for international students.
- The small list of universities leading the charge into MOOCs is also interesting. This group will be of critical importance in the future. The U.S. has more than 2,000 four-year, and another 2,000 two-year, institutions. Education has been a regional affair with the exception of a much smaller number of national research universities. As in other industries, the internet channel is reducing costs of distribution. On one hand, this new online education platform is allowing smaller players to offer highly specialized programs and reach a sufficiently large audience to build sustainable businesses. In the internet industry, this has been coined the "long tail" based on the graph of a normal statistical distribution chart. On the other hand, businesses and universities benefit by building large brands. We believe that the education world of the future will lead to even bigger brands with much broader reach. Remember that the Ivy League universities today educate 0.4 % of all undergraduates. In the future, content created by these highly ranked and branded universities will be able to reach many more students. What's the implication if you are not on the chart below? Should you enter the race to get your courses onto the MOOCs curriculum without any hope of revenue and return on your resource investment?
- We assume that online and hybrid courses will become a standard education offering by the majority of institutions. The big question, from our perspective, is how will the "other" 2,000 universities adapt to the new online program potential? You know, the universities that are not as well branded and ranked. Will they participate in a new content licensing program and offer courses by other institutions using their regional presence and campus facilities to round out the educational offering?
- The tens of millions invested in Coursera and Udacity benefit from the huge leverage of their commercial investments. They make use of their existing academic brands and their infrastructure to provide the content. We find it interesting that 2U was not included though it provides the technology for online programs out of the box for NorthWestern, Georgetown University, WashU, American University and more. Why does this arrangement, which provides more control and input to the individual university brand, not receive as much public attention. Most likely it has to do with scale and brand recognition. The law school of an individual university cannot compete with the attention Standford, Harvard and the MOOCS have garnered by making their content accessible to everyone around the world. That's a clear hint for the future.
- Individual schools will have a great deal of difficulties attracting the volume of students necessary to justify the investment in building online programs and courses by themselves. The process involves picking your most successful niche programs and building a comprehensive and sophisticated marketing program to identify prospective students around the world. So if you've got a dynamic and well-respected Masters in Golf Business Management or Supply Chain Management, perhaps you have a shot. We think generic academic programs will not sell online for the average university.
We look forward to watching how this field develops over the next few years. Will online education become a great complement to the existing national infrastructure? Will it help increase quality and graduation rates? Will it reduce costs? Will it chip away at the monopoly of traditional campus-based universities have as the recognized authority in awarding educational credentials? As these questions are answered, we anticipate the dollar figures in the chart below will increase dramatically. There is money to be made here and that situation certainly brings investment.
Graph 1
Source: Chronicle of Higher Education (Click for extended version of chart)
