Can elephants dance in the coaching industry
The birth of an industry
The era of organized classroom coaching started in 1990s with Allen (1988), Pace (1988), Aakash (1988), Vidyamandir (1989), Bansal Classes (1991), FIITJEE (1992) & Narayana(1999). Few other joined the club in 2000’s such as Resonance (2001), Sri Chaitanya (2006) by developing their IITJEE preparation coaching divisions. Few of the institutes like Pie, Phi rose and perished in this period of time and others like Aakash, Allen, FIITJEE grew very big in terms of the number of students and revenue.
The beginning of these institutions was similar, founders either gave home tuitions or teaching students at their centre. The industry has come a long way from being either a tuition centre of a ‘star teacher’ or home-tuitions driven delivery catering mostly to the creamy layer. Economic boom due to opening up of Indian economy in 1991 has led to explosive growth in income, increasing schools penetration, rising private institutions, the burgeoning middle class changed the basic fabric of the coaching industry. Once restricted to classroom coaching and printed study notes, the segment evolved to a mix of classroom delivery, study material, live and pre-recorded video sessions, online assessments where students can access course material via online portals and smartphone applications.
All numbers are industry estimates
In the early days, most of these firms built their reputation through word-of-mouth. This was sufficient when numbers were small and they were restricted to one city. In fact, in the days of correspondence coaching, basic course materials were often the best advertisement for firms like Brilliant and Vidyamandir. However, as the dynamics of the industry have changed and firms have grown bigger, both in revenue and geographical spread terms, they are now using large advertising outlays and employing the services of big ad agencies to deploy communication across multiple media to reach their target audience.
Dynamics of coaching industry have changed and firms have grown bigger, both in revenue and geographical spread terms
Spread to perfection and upcoming challenges
National players have opened multiple centres across Tier I cities and currently expanding presence to Tier II & III cities. Over the years classroom coaching has become the preferred mode and this has massively complicated distribution. For unlike most service industries where standardisation works well, in classroom coaching standardisation is hard to achieve given the human element, it’s impossible to have the same teaching staff across cities. Most firms, in order to ensure consistency and a standardised teaching methodology, regularly hold refresher courses and skill-updation workshops for their faculty.
To stay relevant to the changing market dynamics they are working on increasing their digital offerings. Tablet and online products have been launched and initially, students have also shown their interest to embrace the change. However, none of the traditional test prep players has been able to develop a world-class digital offering. Though they all consider digital is the way forward but the attention that this domain should have got is lacking. We have not seen any pathbreaking product been developed from the traditional players. One reason could be that they are already churning great profits in the classroom and non-classroom programmes offered. Another is that in spite of the fact that they have transformed in their structure but the vision to develop the world-class digital product is missing and the fear of online cannibalising their offline product is also somewhere evident.
None of the traditional test prep players has been able to develop a world-class digital offering. Though they all consider digital is the way forward but the attention that this domain should have got is lacking. We have not seen any pathbreaking product been developed from the traditional players. One reason could be that they are already churning great profits in the classroom and non-classroom programmes offered
Aakash, a leading institution has introduced Aakash Digital offering live online classes, recorded video lectures, and online practice tests. They have developed Aakash iTutor which not only helps students to clear their doubts but also integrated tests & assessments and e-books. The revenue from these digital offering is very less compared to their traditional model. FIITJEE Ltd, a leader in IIT test prep market offers the digital learning solution by not just offering the past year papers, assessment and concept test but also JEE Main and JEE Advanced preparation tracker to enable a student to understand their strengths and weakness by conceptual learning mechanism.
Young and dynamic challenges
Come 2010, we see a sudden influx of ed-tech companies like Byjus, Toppr & Unacademy. They are changing the rules of the game, earlier the student has to pay a huge sum of amount to a coaching institute, commute every day between home/ school to a coaching institute. These players have eradicated the travel burden, reduced the parent’s financial burden and delivering the content using the latest technology at the student’s doorstep. A student can study sitting at home can watch lectures, take tests and doubts can be clarified in real time. The dearth of quality teachers and crammed classrooms explain what’s wrong with our educational system. The coaching centres which were once considered as the solution to the learning gaps have started to crack the whole system. The revenue no’s of some major ed-tech startups have started to multiply year on year. Traditional teaching practices and classroom-based learning has been ingrained in the minds of students and parents. The level of engagement guaranteed in conventional classrooms gives parents a certain degree of reassurance, while they continue to be suspicious about the ability of app-based learning to achieve the same.
Another market entrant, Askiitians’s (an online platform for IIT JEE coaching) parent firm Transweb Educational Services Pvt Ltd has received funding of $120,000 in 2016. Another new entrant NeoStencil is a managed online education marketplace in the form of a comprehensive, one-stop test preparation platform. The company's online test preparation platform offers live online classrooms where students can learn at their own pace, pause, rewind and replay anytime, use any computer or mobile device to access their classroom and submit their answers online, enabling them to access quality educational content from the comfort of their home. NeoStencil has raised a total of $3.1M in funding over 3 rounds. Mumbai-based test prep startup Avanti Learning Centres have secured Rs 33.1 crore in the third round of funding led by the Michael & Susan Dell Foundation along with Asha Impact and existing co-investors Ted Dintersmith and Pearson Affordable Learning Fund (PALF). The company plans to use the investment to expand to their number of centres to serve 50,000 students across India and continue their curriculum and technology development.
To overcome online's perception challenges, firms still need to simulate the classroom environment, peer learning, and testing environment.
To overcome the perception challenges, firms still need to simulate the classroom environment, peer learning, and testing environment. The learning in traditional classrooms not only takes when the teacher delivers the lectures but when different students clarify their doubts in class, this not only helps the others students to notice the problems they might not even have thought off. The classroom environment is tried and tested method of delivery as it not only brings the discipline but also leads to collective and collaborative learning.
Merging of two different worlds
The possibilities are immense when we foresee the future of test prep market. We will witness merging of two worlds wherein the online player such as Byjus acquire an offline player like Vidyamandir or FIITJEE to increase their presence in the real world or an offline player acquire a budding start-up to strengthen their digital offering.
Traditional players like Aakash or Allen look to acquire online players to improve upon their digital offering and opening up new lines of revenue generation. This will be an excellent step as the priceless offline experience will not only be an added advantage but the value proposition offered will be multiple. The existing digitization efforts taken by the leading players will not only be encashed but also the brand will get immense boost and positioning will be improved for good.
We will also see the consolidation of online market wherein complimentary product offering companies merge to develop a complete packaging. Online players have received record-breaking funding and they can look to buy medium size test prep player. This will not only help them provide hybrid experience along with giving an inroad to the cash-rich component of the business. If these efforts are taken by traditional players by acquiring a start-up and adding their wealth of experience, they will be able to beat the market in a big way. The transition from offline to hybrid will be a difficult path as with limited technology exposure, traditional players need to learn the tricks of online delivery more rapidly. Buying and managing an existing offline model will be much better as this require taking over the existing setup and build upon to offer an unmatched experience.
How traditional will remain relevant
Traditional coaching institutes should look at taking advantage of their priceless experience in coaching, to develop path-breaking products and remove the geographical and financial barriers along with stimulating the classroom experience sitting at home. They should develop AI tools which will measure the data points from their traditional classroom model and use the intelligence in digital offerings. The data collected should be used to develop improved teaching methodology and learning outcomes. This will not only boost the brand image but also keep them abreast with the latest trends in the market. We expect that within the next decade we should witness at least 3-4 traditional players coming up with their next-gen products. They should look at developing a team of next-gen strategists and technocrats to develop classroom experience using AI, VR, and other upcoming technologies.
One point of concern is that these products should be developed by new business leaders who have the acumen to understand the online market as well as knowledge of the current traditional setup
Personalisation of the learning has reached a new level and AI is improving the same day by day. One point of concern is that these products should be developed by new business leaders who have the acumen to understand the online market as well as knowledge of the current traditional setup. If the founders and leaders who are managing the current business try to develop the offering, they may not be able to crack the code of success due to their current thought process. These offerings should be complementing for the current classroom offerings and are also compelling for non-users due to the value proposition (reach, analysis, value for money and personalisation) offered.
How ed-tech will become immersive
New ed-tech companies need to focus on how they can bring this collaborative learning aspect in the learning process along with all other key benefits such as low cost, convenience, and personalisation. Companies need to collaborate with various technologies across different sectors to develop the new age requirement. VR can bridge the classroom experience, two-way video communication can give the educator eyes and ears to manage rigour, high-speed internet will be able to provide the medium to transfer the complete data to seamlessly stimulate the teaching-learning process. Developing AI which not only helps the teacher to take care of most of the queries but also gathers data for each and every student to develop a better learning process of each child. The technology used in gaming will not only help to simulate the whole education concepts leaving lifelong learning at any stage of life. Perception of parents can be modified and trust in the online delivery of education will require some more time but the necessary ingredients required are already there. This would definitely require a lot of effort as every single content need to be developed using various aspects of learning such as visual, verbal, logical, and interpersonal among others. AI will understand the learning ability of every student and helps the educators to curate the content in the best possible fashion.
These are all author's personal views and eventualities emerging shall be only coincidental.