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Coronavirus outbreak opens unprecedented opportunities for China’s online education market

Boom in new users has saved online education companies hundreds of billions in advertising, industry insider says.

Photo by Nathan Dumlao on Unsplash Photo by Nathan Dumlao on Unsplash

On February 11, Xueying was supposed to have her first physics class of the semester at 8 a.m. However, instead of sitting in her classroom, she turned on her laptop at home and opened a livestream on Alibaba’s collaboration platform DingTalk. Like millions of other students in China, the 16-year-old student has been forced to stay home as the spring semester remains postponed due to the coronavirus outbreak.

While dates to resume school have not yet been announced, the Chinese Ministry of Education has been encouraging schools across the country to explore online education options. With more than 200 million primary and secondary students in China forced to take lessons at home, players in the country’s online education market, such as online education companies, office apps, and even online video platforms and short-video apps, have encountered an unprecedented opportunity for growth.

To lure new students, online education companies have started to provide their services for free. TAL Education has been offering free online livestreamed courses for students of all grades across the nation, as well as technical support for teachers from the end of January, while Tencent-backed online English learning platform VIPKid also followed suit by offering 1.5 million free online English and math courses to students aged 4-12.

“It took the whole team about 70 hours to transform the rough idea of this project into a product offering free online courses,” Li Guoxun, dean of Children Research Institute at VIPKid, told 36Kr. “However, the hard work paid off when we saw that over 100,000 users had signed up for the free courses after the project was launched.”

The coronavirus outbreak could give a second chance to the online education market, which suffered a “cold winter” in 2019, when more than 12,000 education companies reportedly shuttered, according to Chinese enterprise data provider Qichacha, and only 332 fundraising activities occurred, down 47% compared with 2018.

Online collaboration tools are also joining the race to get more users by launching new study-from-home services for teachers and students. As of February 10, more than 300 cities in over 30 provinces have joined DingTalk’s platform, which started to offer a set of features to simplify online classes, also allowing teachers to easily grade students’ assignments online. The platform expects to cover over 50 million students across the country, according to the company.

Other office apps and video conferencing platforms including WeChat Work, Huawei’s WeLink, Tencent-backed Xiaoyu Yilian, and Yun Shixun have also rolled out similar services to support teachers conducting online courses. “Nobody will miss such a golden opportunity,” an education industry insider told 36Kr.

Online video platforms and short-video apps have also joined the fray by collaborating with schools and education companies, as many primary and secondary school teachers ask students to watch online courses.

Youku, Alibaba’s video streaming unit, has launched a “study at home” platform which allows primary and secondary school students to watch online courses for free. Over 10,000 teachers and more than 300 education companies have joined the platform including New Oriental Group, YuanFudao, and 51Talk. On February 10, more than 5 million students across 20 provinces used the platform to take classes, Youku said.

ByteDance’s short-video app Douyin has also partnered with China’s most prestigious educational institutions, Tsinghua University and Peking University, to offer free open courses to the public via livestreaming. Topics include international relations and Chinese traditional culture, among others. Over 160,000 Douyin users watched the first livestreaming class offered by Tsinghua University, according to Sina NewsDouyin has also provided a set of different content varying from foreign language learning to health tips for its users to study at home.

As students have to stay at home and study online, some parents are worried about the lack of physical exercise.  Photo: Tuchong

Will students stay after the coronavirus?

The sudden interruption of classroom classes under the coronavirus outbreak has brought an unexpected surge in the number of users joining online courses. The number of available virtual classes and online education resources also spiked.

Chen, an English lecturer working for a Beijing-based online education company, told KrASIA that the number of students joining his company’s free trial livestreaming sessions has more than doubled in recent days, reaching up to 10,000 students for each class.

“The number of people using online learning platforms during the virus outbreak has far exceeded the number of new users these companies have gained last summer, after burning billions of RMB,” said Zhu Yu, CEO of Dongfang Youbo, an arm of Chinese education firm New Oriental Group.

“The boom in new users on these platforms has saved online education companies hundreds of billions of RMB in advertising,” he told 36Kr in an interview. Reportedly, online education businesses have been struggling with extremely high costs to gain new users. Firms in this field spend could spend up to RMB 1,000 (USD 142.5) to gain one customer, according to an industry insider.

However, it is hard to tell whether new users will stay on these platforms after the coronavirus crisis ends. According to data firm iResearch, the online education market in China hit RMB 251.76 billion in 2018, with an expected average year-on-year growth between 16% and 24% for the following three to five years. The research firm mentioned a rising acceptance level among users, enhanced online payment options, and an improvement in the online learning experience as the main reasons behind the expected steady growth.

Still, Chen believes only a few new users will remain for regular paid courses, but the percentage might not be very high, he said.

“The free sessions offered under the epidemic are still more or less a marketing strategy to make users pay for our regular courses,” he said. “But many people will leave the platform when they have to pay for the service.”

Also, parents still have major concerns about adopting online education as the main resource for learning.

Xueying’s mother, Sarah, told KrASIA that she still prefers face-to-face classes, as they can be more efficient since students are easily distracted when studying at home.

“I’m also really worried about my daughter’s health, as she has to watch livestreamed classes for the whole day, which is not good for her eyes,” Sarah said. “And she doesn’t have much time for physical exercises since she has to sit in front of the laptop all the time.”

36Kr is KrASIA’s parent company.