Future reimagined: The US$5trn education market coming of age
Education is likely the most important investment in an increasingly intellectual economy, in our view (see our related global Q-Series report). According to Euromonitor, global spending on education amounted to U$5trn in 2019 (6% global GDP), yet education is significantly under-represented in the capital market. As advances in governmental policy, technology, and business models are redefining the education value chain, and COVID-19 is spurring 1.5bn children to adapt to online learning, we believe a new education era is coming of age. How will online education create multi-decade investment opportunities?
Why learn online? How will online education play out?
We think online education is well-positioned to address the scalability/affordability limitations of offline education and the rising demand for lifelong learning in the fast-evolving world economy. In this report, we analyse the China and US online education markets as case studies on how online education could play out globally. The full suite of UBS Evidence Lab global consumer surveys and mobile trackers show pickups in online consumer preference and usage, likely spurred by COVD-19. We expect this to be only the beginning of a seismic structural shift.
How big is the online education opportunity?
Despite being a fraction (about 9% in 2019) of global education spending, we expect non-formal education to build up critical mass online, with more to-customers (2C) models, and reach US$213bn in 2025E. For formal education – the lion’s share of total education spending – we expect offline public/not-for-profit (NFP) formal education institutions to adapt to learners’ changing preferences by providing partial/fully online programmes. We find meaningful upside (2025E revenue: US$217bn) for to-business/to-government (2B/2G) companies that facilitate this online transition. We expect online education to add a US$94bn new revenue opportunity to the value chain, most notably in advertising, cloud services, data centres, hardware, and software.