By guest blogger Leo Doran
Future revenue in the $33 billion e-learning market is expected to fall precipitously in the United States and internationally, but sales of other types of digital learning products are predicted to rise, according to a market research report released recently.
The free report, published by Monroe, Wash.-based Ambient Insight, predicts a five-year compound annual growth rate, or CAGR, of negative 6.4 percent for self-paced courseware, translating into an anticipated $13.3 billion drop in worldwide revenue from 2015 to 2021.
The report defines self-paced courseware as being accessed on a desktop or laptop and spanning the K-12, higher education, corporate training, and privately marketed software (such as that produced by language-learning company Rosetta Stone) sectors.
According to the document, “the recent steep declines in the e-learning industry essentially mean that the e-learning era is effectively over. The product has reached the end of its product life cycle and simply cannot compete with new learning technology products on the market.”
The news is so bad for e-learning vendors that Ambient Insight announced it would stop issuing comprehensive reports on the struggling sector. Sam S. Adkins, the head researcher for the company and author of the report, said in a press release that “in a rapidly declining product market, there is essentially no demand for commercial market research on that product. Suppliers don’t pay for bad news.”
However, sales of mobile learning, simulation-based learning, game-based learning, and “brain-training” software are all on the rise. These increases are cited as major factors in the global decline of computer-based educational and professional training software. In contrast to the slowing e-learning market, each of these new product classes are expected to see sturdy growth of at least 7.5 percent in the next five years.
Other market inhibitors are contributing to what the researchers called a “perfect storm” for self-paced e-learning products, including a fully saturated market with numerous vendors driving down prices and profit margins; a “collapse” of the market for learning management systems products globally; and a “leapfrog” effect in which developing countries are skipping self-paced e-learning and moving directly to mobile or game-based learning, the report finds.
Unstable Economies Impact E-Learning Market
Globally, the market for self-paced e-learning is hamstrung by ominous forecasts in the United States and China, the two largest markets for the class of products. Latin America is also expected to see a drastic reduction in e-learning revenue, in large part due to troubled Brazilian and Venezuelan economies.
The only region expected to see a modicum of growth in e-learning revenue over the next five years is Africa, with a CAGR of .9 percent, while the markets in Western and Eastern Europe are expected to stay relatively stable at a CAGR of negative 1.5 percent and negative 1.1 percent, respectively.
One headwind specific to the U.S. market is the trend toward open and free educational resources, or OER. Since the U.S. Department of Education has required that products developed with department dollars have open licenses, the market has seen an increase in free or affordable e-learning products, putting a damper on revenue for commercial products in the preK-12 sector.
Similarly, the trend toward OER and greater competition among vendors is also expected to negatively impact the LMS market. According to projections, revenues for LMS products are expected to drop to $1.5 billion in 2021 from $2.7 billion in 2016.
Rather than finding infusions of new clients, the report finds that “the current LMS market is dominated by replacement cycles,” and because vendors are increasingly offering free-trials and easily adoptable cloud-based solutions, “buyers are shifting to competing products and almost always at a cheaper price.”