The $800m (£580m) deal between two major players in the edtech industry is a resounding endorsement of the short-term training and microloan offerings that have grown in popularity, experts have said.
Trace Urdon, managing director of Tyton Partners, a strategy advisory and investment banking firm focused on the education market, said the acquisition of edX, the nonprofit platform founded by Harvard University and the Massachusetts Institute of Technology, by 2U, an online education company that already has more than 80 university partners, was “an endorsement of the kind of short courses and microcredit offerings designed for ‘use”.
“People weren’t really willing to pay real money on a massive scale for this stuff before, but the combination of acceptance of online education, dissatisfaction with pricing degree programs and greater acceptance by employers, has moved things in that direction…it shows they are here to stay,” he said.
At the same time, it made huge sense for both organizations: edX gets badly needed capital and 2U gets access to edX’s website traffic, which is huge, and can try to sell those students in degree programs, he added.
This “both improves margins on programs that [2U] already offer, which are mostly high-priced programs, but allow them to continue doing what edX started doing, and what Coursera is doing, which is offering much cheaper degree programs. So it makes this whole market sector more robust and makes them more formidable,” Mr. Urdon said.
However, edX could encounter “friction” from its current partners over the end of its nonprofit status, he added.
The agreement will create a huge entity in online learning with access to over 50 million students worldwide and will have over 200 universities and other institutions as partners.
Sean Gallagher, executive director of the Center for the Future of Higher Education and Talent Strategy at Northeastern University, agreed that it “solidifies how MOOCs, microloans, online degrees and the world of elite traditional universities converged after Covid-19”.
“The sector of companies partnering with universities to provide support services and online programs continues to evolve. It increases the level of competition on the playing field,” he said.
Michael Horn, co-founder of the Clayton Christensen Institute, a nonprofit think tank, said the deal would likely mean more mergers as other online program providers seek to participate in a more competitive industry.
The new partnership can compete with Coursera and Moodle, which were able to have lower-cost models, he said. “It also sets the stage for more low-cost providers to start entering the market. That, and mobile learning, are the new frontiers in this space. It will be interesting to see what happens next. »