Online Education Trends

Online Education Trends

The relatively unregulated niches in the segment, like the parallel and ancillary, the scope for profits and low risk have made education one of the most lucrative sectors in the Indian economy - DS Rawat, secretary-general of Assocham Recent survey of PE and VC firms pegs their planned investment in education at Rs. 4,500 Cr by 2014 Investments of Rs. 929 Cr across 23 deals in 2010 Online education market piping hot, Pearson acquisition of TutorVista in Rs. 577 Cr Make Hay While Education Shines (Source: expressbuzz.com Jul 2011) 2

Largest Capitalized space Public spend of Rs. 2 Trn (3.8% of GDP), 12% CAGR over FY08-12E Private spend of Rs. 4K Cr (16% CAGR over FY08-12E) Over 50 percent of IES private, compared to 32 percent in US and 25 percent in China (Source: IDFC-SSKI Research) 3 Indian Education Sector (IES) Market Drivers

Largest Demand Globally the largest population of 460m within the 0-20 years age group 14% higher than China, difference expected to rise to 37% by 2025 (Source: IDFC-SSKI Research) 4 Indian Education Sector (IES) Market Drivers

(Sources: McKinsey India Consumer Market Research, MHRD, IDFC-SSKI Research) Shifting share-of-wallet 5% of average HH income spent on education, CAGR of 8.6% vs. consumption growth of 3.2% over 1995-2005 (growing fastest globally) Consuming class, i.e. HHs with annual income >Rs. 90,000 burgeoned from 28% of total population in 2002 to 48% in 2010 Non Cyclical Industry Sector witnessed growth even through the 2008-09 downturn, driven by demand supply gap, higher spending, superior quality perception of private sector and government reforms 5 Indian Education Sector (IES) Market Drivers

Non-Formal IES forms 20% of total private spend Coaching classes market (63% of Non-formal IES) (Sources: Coaching class players, IDFC-SSKI Research, MHRD, IDFC-SSKI Research) Non Formal Segment : Market Share 6

Despite impressive statistics, Conventional Non-Formal IES remains a highly fragmented and largely regional space, plagued by the following limitations : Low Scalability (95% of market difficult to scale) Limited Reachability High service costs Scores low on Scalability Inefficiency = Opportunity The inefficiencies of traditional non-formal segments can form new opportunities of Online education 7

E-learning can be helpful in using it as a proper way to leverage quality of education as it breaks the barriers in terms of geography, time, quality and competent teachers Kirthi Neelakandan, director, education and research, Sun Microsystems 8

A private instructor interacts with an individual / small group of learners in real time over the Internet to impart a specific knowledge or skill Technology to drive this interaction can be in the form of specifically designed, - Whiteboards - Chat rooms (voice & video chat) - Email What is Online Tutoring? All that is required is that the student and the teacher have a computer and access to internet 9

Online Learning - 3Us : Ubiquitous Any age, any place, any time, any direction Solves the scalability and reachability issues Unbundling Education Offers students an assortment of services packaged and customized to fit specific student needs Why Online Tutoring? Unlimited Choice What, when, who? Self directed, self paced 10

Convenient Economical Leverages creativity & imagination Affordable Technology Faceless Quality education Dynamic, real-time Interactive and collaborative Just in Time/Upgradable (zero Obsolescence) Relevant (Increased Employability) Effective learning Active feedback Networking Opportunities Online Tutoring : Advantages 11

PE Firm Target Segment Deal size (US $m) Period Manipal Education Group TutorVista Online tutoring (US focus) 2.5 Oct-07 Aditya Birla Group Core Projects Multimedia ICT/CAL 3.5 Jan-08 KPCB, Sherpalo Ventures & Infoedge Lightspeed Venture Partners & Sequoia Capital StudyPlaces Education portal 3 Jan-08 TutorVista Online tutoring (US focus) 18 Jul-08 Capital18 24x7 Learning solutions e-learning - training solutions 4 Oct-08 EduTech Navis Capital Partners Multimedia ICT/CAL 30 Apr-09 Franklin Templeton Career Point Test Prep 10 Jul-09 FIITJEE Matrix Partners Test Prep 20 Jul-09 India Equity Partners IL&FS Education and Technology Services Multimedia ICT/e-learning - training solutions 35 Jan-10 Pearson TutorVista Online tutoring (US focus) 118 Jan-11 PE Blitzkrieg - Ancillary Education FIITJEE QInvest Test Prep undisclosed Jan-11 12 (Sources: Websites )

Technology Drivers Broadband Penetration - Broadband subscription grew 2.7% to 11.21m in Jan- 2011 from 10.71m in Dec-2010 - Ranked 3rd in global broadband growth, predicted to grow to top ten - Number of broadband connections expected to be 75m by 2012 and 16m by 2014 (Source: Broadband Forum Press Release India 2011) 13

Universal Service Obligation Fund (USOF) National Broadband Plan (NBP) - National Optical Fibre Network (NOFN) - 160 million broadband connections by 2014 - Planned investment of INR 60,000 crore Technology Drivers Rural Wireline Broadband Scheme - 2,61,413 broadband connections in Jan 31, 2011 - Target of 8,88,832 connections by 2014 National Broadband Penetration Program (NBPP) - BSNL, and HCL joint venture - Bridge Digital Divide by offering PC + Broadband at subsidized rates to rural customers (Sources: TRAI Press Release 2011, economictimes) 14

Emerging Tablet Market Introduced in 4Q 2010, 1.58 lakh units sold in the ninemonth period ending June 2011 More than 10 vendors, 27 models in 2011 India s new low-cost computing and access device Aakash unveiled in Oct 2011 Developed under the National Mission on Education through ICT 100,000 units of the device purchased by GOI so far, available at a subsidized rate of $35 Technology Drivers (Sources: CyberMedia Research study 2011) 15