Online Higher Education Market Update 2008 Market Size, Forecasts and Differentiation

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1 Online Higher Education Market Update 2008 Market Size, Forecasts and Differentiation Online Higher Education Learning Collaborative Eduventures, Inc. December 2008

2 Eduventures Study Provides Market Size and Forecast Data and Highlights Growth Factors Online headcount forecast to reach almost 3.5 million by 2013 (c.18% of all students) Based on fall entry in degree-granting, Title IV schools only Online is defined as 80%+ of formal instruction online Current economic downturn may initially slow growth in short-term; online will then become strongly counter-cyclical Post-2013, more significant traditional student or international participation may be key to further expansion A maturing market is forecast to drive a more nuanced and diversified approach to positioning and differentiation Copyright Copyright Eduventures, Eduventures, Inc. LLC. 2

3 Online Market Continues to Grow Steadily and Represents ~10.6% of All Students Today and a Projected 18% in ,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 47% 35% Online Headcount Growth 31% 1,400,672 1,101, ,931 27% 1,707,945 3,465,991 3,214,990 2,878,213 2,535,674 2,194,932 1,923,599 22% 50% 45% 40% 35% 30% 25% 20% 15% 500, , ,563 13% 14% 16% 14% 12% 8% 10% 5% 0 Copyright Copyright Eduventures, Eduventures, Inc. LLC F 2009F 2010F 2011F 2012F 2013F Assumes major recession from Q through where cyclicality (weakness in some non-military tuition assistance, corporate training, consumer confidence) may offset conventional counter-cyclicality Source: OHE-LC data, NCES and OHE-LC staff analysis. Fall entry 0% 3

4 A Number of Variables and Assumptions Impact Forecasts Nature of Downturn Perception, severity, impact Adults Post-2013 growth may be inhibited by upper limits of online share of adult market Traditional Students Possibility that traditional age student participation online at program level will be post-2013 growth vehicle International Role that online may play for cross-border higher education Fall v. 12 month headcount Norm of Fall reporting in U.S. higher education may undercount online market size 4

5 For Profit Schools Retain Disproportionate Share of Online Market For-profit strengths remain- speed to market, execution, marketing spend/technique, customer service, online fit with mission Pressure on for-profit share- steady normalization of online at publics with local/national brands, and often much lower prices points Forecast, Fall 2013 Higher Education Market Share Online Market Share (+/-2008) For-Profit 7% 30% (-2%) Private Non-Profit 19% 12% (-2%) Public 74% 58% (+5%) TOTAL 100% 100% Online Headcount (+/- 2008) 1,040,000 (+c.400,000) 416,000 (+c.140,000) 2,010,000 (+c.1,000,000) 3,465,991 (+c.1,500,000) 5

6 70% 60% 50% 40% 30% 20% Undergraduate Is a Relative Weakness While Graduate Level Is an Online Strength 22.2% Est. Online Students by Credential (Fall, 2008) 28.4% 46.5% 59.1% 28.3% % of Online Market % of Offline Market Est. Online Headcount & Market Share, Fall 2008 Associate= 339,000 (c.7.9%) Bachelor s= 708,000 (c.7.9%) Master s= 431,000 (c.21.3%) Doctoral= 46,000 (c.24.1%) Undergraduate= c.7.9% online Graduate= c.21.5% online 10% 0% 11.4% 3.0% Associate Bachelor's Master's Doctoral Undergraduate programs emphasize completion programs at bachelor s level with relatively few online programs at community colleges and less academically experienced demographic 1.0% Source: OHE-LC data, NCES and OHE-LC staff analysis. Excludes certificates, first professional and non-credit

7 Online Program Growth Is Driven By a Number of Components Component The fact of online deliveryconvenience, flexibility Focus on the adult learner Mass market programming/audience Niche programming/ audience Brand- local/regional Brand- national/ international Marketing spend Marketing technique Back office functionality Impact Basic contrast with conventional campus-based delivery Basic contrast with an institutional mind-set focused on the traditional age student Programming concentrated in high-demand areas; may embody a particular level (e.g. graduate) or disciplinary focus Programming has no or few competitors; audience is non-standard; meets addressable need Established reputation by geography; tough for competition to match National/international reputation/presence counters local brand loyalty; broadens applicant pool Outspend the competition to gain visibility Use of innovative/efficient marketing, including partnerships with feeder organizations, to increase visibility, control costs and improve conversion Enhance understanding/efficiency of the value chain; increase customer/staff satisfaction; improve margins 7

8 These Components Will Continue to Be Critical, But Not Sufficient for Differentiation Student decisionmaking becomes more demanding and rational Schools will become more self-aware of the nature/value of current approaches/assets, and will do more to position this to the market More nuanced aspects of online offerings will become much more developed and visible, and necessitate a more complex explanation for online growth 1. Common Positioning Faculty Undifferentiated Financial Aid Pedagogy/Student Experience Pricing Scheduling/Acceleration Status/Experience/Size 3. Common Positioning Programming Differentiated Student Support 2. Uncommon Positioning Alumni Undifferentiated Awards and Rankings Credit Transfer News Section/Blogs Partnerships Platforms Student Body/Diversity 4. Uncommon Positioning Outcomes Differentiated Programmatic Accreditation Values Source: Competing in Online Higher Education 2008, Parts 1-3 (OHE-LC, 2008) 8

9 Learn More About How the Eduventures Online Higher Education Learning Collaborative Can Help You Position For Growth Eduventures Online Higher Education Research Tracks include: Marketing and Recruitment Operations Programs and Markets Teaching, Learning, and Outcomes For more information about our research and consulting services, please contact Lauren Berry: or visit our Web site: 9

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