The $800 million (£580 million) deal between two major players in the edtech sector is a ringing endorsement of the short course and microcredential offers that have grown in popularity, experts said.
Trace Urdon, managing director of Tyton Partners, a strategy consulting and investment banking firm focused on the education market, said that the acquisition of edX, the non-profit platform founded by Harvard University and 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 microcredential offerings designed for employment”.
“People hadn’t really been willing to pay real money at scale for these kinds of things before but the combination of acceptance of online instruction, dissatisfaction with the prices of degree programmes and more acceptance by employers, moved things in this direction…it shows they are here to stay,” he said.
At the same time, it made enormous sense for both organisations: edX gets the capital it sorely needed and 2U gets access to edX’s website traffic, which is massive, and can try to upsell those students into degree programmes, he added.
This “both improves the margins on the programmes that [2U] are already offering, which are mostly high-priced programmes, but allows them to continue to do what edX did started to do, and which Coursera does, which is offer degree programmes that are much less expensive. So, it makes that whole area of the market more robust and makes them more formidable,” Mr Urdon said.
However, edX may experience “some friction” from its current partners about ending its non-profit status, he added.
The deal will create a huge entity in online learning with access to more than 50 million students worldwide and will have well over 200 universities and other institutions as partners.
Sean Gallagher, executive director of Northeastern University’s Center for the Future of Higher Education and Talent Strategy, agreed that it “cements how Moocs, microcredentials, online degrees and the world of elite traditional universities have converged post-Covid-19”.
“The sector of firms that partner with universities to offer support services and online programs is continuing to evolve. This escalates the level of competition in the playing field,” he said.
Michael Horn, cofounder of the Clayton Christensen Institute, a non-profit thinktank, said that the deal would probably mean more mergers as other online programme providers seek to participate in a more competitive sector.
The new partnership can compete with both Coursera and Moodle, which have been able to have lower-cost models, he said. “It also sets the stage for more low-cost providers to start to enter the market. That, and mobile learning, are the new frontiers in this space. It will be interesting to see what happens next.”
