The title picture comes from: Figure Worm
The epidemic is intensifying, unexpectedly bringing a group of online education companies and remote office software operators to a peak period of customer acquisition.
As of January 28, Eastern Time, Good Future rose 5.33% to $ 49.96 per share, with a market value of about 29.566 billion U.S. dollars; New Oriental rose 5.85% to $ 129.08 per share, with a market value of about 20.45 billion U.S. dollars; It only fell 0.06% to 16.16 US dollars, with a market value of about 1.803 billion US dollars.
With the rise of education stocks, almost all educational institutions or platforms have chosen to take advantage of the hot iron to overwhelmingly promote free online courses. At the same time, the education business lines of Internet giants such as Ali, Tencent and Byte Beat have also Speed up follow-up.
It is definitely the first time for such a large-scale student to receive online learning at home. Therefore, from the perspective of many education practitioners, this epidemic has greatly promoted the popularization of online education, and has also lowered it. Opportunity to acquire customers and increase profitability.
But it is worth noting that for an online education platform or institution that has just experienced the cold winter of capital, low-price competition, and large-scale cleaning, the so-called turning point may not be a timely rain.
Intensified shuffle period
In 2018, the state’s regulatory policies for offline education institutions were frequently issued. After the introduction of a series of standardized policies, offline education has “dead” a large number of people. As a result, a large number of parents of students have turned their training needs to online. This has increased the market opportunities of online education platforms to a certain extent.
However, online education in 2019 failed to usher in the outbreak. According to a market survey, only about 5% of online education institutions are profitable, and the remaining institutions are basically “loss of money to make money.” Some online education has been shut down or mass layoffs due to poor management, broken funds.
Only in October last year, the online English learning platform “Langbo.com” fell into arrears of wages, and then “Xueba One-to-One” and “Liyou One-to-One” broke out and ceased operations.
In this industry background, the outbreak of pneumonia will certainly bring traffic peaks to online education, but at the same time, it will also intensify the competition that has already entered the shuffle period. Why do you say that? On the one hand, delays in class time have led to a flood of online education platforms, and at the same time, educational institutions have transitioned to online, which has actually increasedMore competitors to snatch online users.
On the other hand, online education is still stuck in a large-scale advertising marketing traffic war. In order to seize the opportunities created by online education this spring festival, both the head platform and new participants are likely to continue to increase advertising. Investment, which will undoubtedly bring cost pressure to many institutions with unknown profit prospects.
And once the traffic conversion is not ideal, the pneumonia epidemic actually accelerates the survival of the fittest.
As said to the founder Chen Xiangdong, “When more and more parents and students choose online education, in a sense, the traffic will become cheaper”, but “I do n’t feel online The marketing costs of educational institutions will drop significantly because competition still exists. ”
The epidemic brought both timing and crisis to the education industry, which was already proven during the SARS period in 2003. According to Yu Minhong’s recall, in April of that year, a large number of students requested a refund, but New Oriental spent the prepayment in the summer, and the company was facing a deficit of more than 20 million yuan in working capital. Fortunately, with the borrowed money, New Orient passed the crisis.
Although the technology of online education is more mature than in the past, for organizations like New Oriental and Good Future that cover online and offline business, the popularity of online education is only a hedge against the loss caused by the suspension of offline courses. There may be no significant positive effect on overall performance.
On the one hand, there is an intensified online education shuffle period, and on the other hand, the performance status of the head platform is not clear. This epidemic has brought more than just optimism on online education.
Is the sinking market a bone?
According to the data of the Institute of Foresight Industry, the online education users in China are mainly distributed in the second-tier, fourth-tier and below cities, and the proportion of the two users in 2018 is as high as 34.8% and 32.6% respectively. In addition, while the proportion of users in second-tier cities has declined, third-tier cities and belowThe proportion of users in the city has increased significantly, and online education presents the typical characteristics of a sinking market.
Obviously, during the special period of the Spring Festival, the large-scale movement of population and the inevitable circle of communication and interaction, after the intensification of the pneumonia epidemic, provided the best conditions for online education to sink. In other words, the epidemic will allow many low-tier city users who have not been in contact with online education to obtain educational resources online for the first time, which is undoubtedly another benefit of online education.
As early as last year, Xueersi.net started to set up new bases in Wuhan and Chengdu. The tutor team originally located in Beijing was relocated to the new base. Who and how to work with them also set up new locations in Wuhan, Xi’an and Jinan Board.
Only, the sinking market is difficult to overcome only through the promotion of free courses, and it is easy to fall into the trap of low-price competition after the epidemic is over, which must be watched. According to data from online education video technology platform Polyway, the total number of people watching live broadcast in third- and fourth-tier cities in 2016 was 2.019 billion, 3.34 billion in 2017, and 7.17 billion in 2018. Last year, it reached 98.95 as of November 23 Million times.
The sinking market has contributed to the increase in traffic to online education, but the core customers of many platforms are still from first-tier and second-tier cities. This contrast means that traffic conversion is still a problem for sinking market expansion, especially the force majeure zone of the epidemic. Incoming traffic peaks, gathers faster and drains faster. In order to trap this part of the traffic, we can foresee that the price war in the next year may be the mainstream of online education platform competition in the sinking market.
This is beginning to happen. Netease Youdao’s Youdao boutique class has reduced the price to 3 yuan and 2 Chinese lessons, and the homework has helped the “9 yuan and 5 lessons” audition package ads frequently swipe the screen …
However, once the price is low, the quality of the course and the effectiveness of the education cannot be guaranteed. The classroom of the low-cost live course also accommodates hundreds of students online at the same time. When students ask questions, the teacher can easily ignore them. When answering questions online, the teacher only goes online on a regular basis, and the answering method is more perfunctory, often sending out information. In addition, many parents and students report that the sales routine in low-cost classes is becoming more and more offensive.
Disorderly low-price competition not only makes online education fall into the dilemma of high traffic and low conversion, but also because it usually relies on large-scale advertising, it also makes the platform bear excessive cost pressure.
A sales person in charge of the online school revealed that although the low-cost classes can be quickly drained, the retention rate is not very good. His network correction has repeatedly emphasized that “the low-cost classes cannot be used as life-saving straw. The focus should still be on the quality of teaching. ”
Can capital recover?
The past year was undoubtedly the capital winter of the education industry.
According to the blackboard insight data, after the investment and financing peak in 2016 in the education industry, as of 2019, the number of industry financing events has clearly shown a downward trend. Only 332 financing events occurred in 2019, compared with the same period last year, the drop has already approached the 50% mark and reached 47%. This state has been going on for three years. Compared with the previous year, it has fallen by 21% in 2018 and 10% in 2017.
Because of the industry trends, the angel round decreased by 143 compared with last year, a drop of 70%; the A round decreased by 73 compared with last year, a drop of 51%.
The cold winter of capital once trembled the entire education market. According to the data provided by the enterprise investigation, 12,000 education companies have shut down in 2019, and Yu Minhong even bluntly stated that “an estimated 80% of education companies will not survive.”
In this context, the epidemic is likely to be an inflection point in the industry, while lowering the cost of customer acquisition on the platform and warming up capital. Because I believe that many investors will not miss this opportunity of mass popularization of online education, and the powerful head platform will get more attention.
Certainly not too optimistic.
Blackboard insights statistics on institutions that have invested more than 5 times in the education industry in 2019, including New Oriental, Good Future, Beita Capital, Sequoia Capital China, Love Learning, etc.The number of New Oriental shots is relatively stable, and the number of good future shots is obvious cut back. Investors in such educational institutions are now damaged by the suspension of offline courses. If online businesses cannot make up for their losses, their willingness to invest in the next year may continue to decrease.
In addition to the investment of educational institutions in the industry, it is worth mentioning that the Internet giants behind many online education platforms. Such as Tencent, Baidu, Byte Beat, they not only bet on VIPKID, Ape Coach and other major players, but also usedIts own traffic advantage attempts to seize the high ground of Internet education.
Among them, the biggest ambition is byte skipping. Zhang Yiming created two “super platforms” in headlines and tremolo in the era of traffic. Now he tries to copy successful templates to various fields. The education sector is obviously one of the goals.
Fortunately, a single traffic introduction has not yet brought about the growth of online education platforms, and the accumulation of bytebeats in educational resources is not comparable to that of New Oriental and Good Future. These platforms can still pass the traffic entrances provided by giants and Fund expansion business. Just one thing, when this online education traffic war continued to increase revenue for traffic media platforms such as Baidu and Toutiao, making it the only winner of drought and flood protection, which also indirectly buried hidden dangers for themselves.
2019 has passed and 2020 has just begun. The former has witnessed the ordeal of the entire education industry, while the latter has driven the advancement of online education in disguise. But no matter where this inflection point is pointed out, the crisis for all participants has not been resolved, and their biggest problem is how to survive.
So, because of the epidemic, shouting online education is about to spring, please wake up.