Hollowing Out: Will MOOC platforms be Hollowed out by Specialist providers?

In January I wrote Who are the right partners for professional skills? The purpose of the article was to highlight that non-University providers may have strategic advantages in addressing the professional skills market which MOOCs (and by extension Universities) are competing for. Sitting behind the article was a wider thesis, that such specialist providers represent a critical threat to MOOC platforms and it is that thesis that is the subject of this article.

The ‘Hollowing out’ thesis argues that having expedited the legitimation of online learning, MOOC platforms are now under threat by new, specialist providers. Rather than having to serve a broad array of interests, specialist providers ruthlessly target the more profitable subject areas, such as Coding, and then align their platform, business model and operational efforts to seize market share, depriving MOOCs of revenue from their key subjects.

If nothing else, MOOCs have achieved two things since their inception. The first is to catalyse and (in practical terms) create, a new market of online learning that currently stands at over 81m learners and secondly to legitimate that market by bringing in elite brands to online learning such as Harvard, MIT, Stanford etc. While online learning platforms existed before, MOOCs have catapulted the medium into popularity and by throwing courses at the wall and seeing what sticks, have discovered that the prime market appears to be professionals.

MOOC since grown that market, building business models around it and targeting consumers and employers alike. The specialists that MOOCs enabled (or at least prime beneficiaries if they preceded MOOCs) have, by virtue of being locked out of the university market, instead focused on picking lucrative niches such as Coding and it is to these that we turn our attention.

Coding is emblematic of the growth and legitimisation of online learning, with a raft of competitors emerging such as Codecademy (25m users), Treehouse (600K users) and Pluralsight all of whom have seen explosive growth including paying users. Coding courses also hold a unique place for MOOCs in in genesis and value. The first MOOCs were in Coding (at least Computer Science), driving enrolments — they are still among the most popular courses and above all critical to revenue.

Is the the emergence of such specialists a threat to MOOC platforms? The two main arguments are that:

1. The professional education market is not a zero sum market
2. Coding is an exceptional subject area given its history

To point number (1), it’s true that the addressable market is very large — even a crude measurement of English speaking graduates with access to the internet would yield a number considerably in excess of 81m however that misses the fragility of MOOC platforms. None are profitable yet and lucrative courses cross-subsidise the rest of the platform, were specialists to lure paying users from those lucrative courses with their own offering it could critically cut into revenue.

Point (2) is more complex. It’s true that Coding could be considered the exception, the subject has a long history of autodidacts and online learning communities fuelled by a passion for technology and the paucity of Computer Science faculties. This was further enhanced during the dot com boom where business demand for programming skills forced businesses to hire those without computer Science degrees, creating a more permissive employment culture for programmers that endures to this day.

But even if Coding were the exception, MOOC platforms can hardly afford to cede ground even in this area. Virtually every government in developed and emerging economies has a Coding strategy pointing to its primacy in the economy from the US to Dubai. Nor is it sectorally limited to just ICT, Digitisation is permeating across every sector — no sectoral growth plan will be complete without accounting for Digitisation and by extension a demand for Coding skills. No MOOC platform then, that aspires to service the professional skills of the future can omit Coding.

Coding however, is not the exception. It is both driving and symptomatic of wider shifts in the economy that specialist platforms are capitalising on and which MOOC platforms will need to react to. (1) Coding is driving the next wave of subjects (2) Technology driven demand gaps (3) Supply constraints via choice of partner and (4) Demand driven subject provision.

1. Coding is driving the next wave of in-demand subjects — Bootcamps, the archetypal market driven response to Computer Science shortages started with Coding but the next wave (also mirrored by online options) are in adjacent or derivative areas such as UX, Product Managers and Cybersecurity. DataCamp, founded in 2013 has 1.2m users and of Cybrary, founded in 2015 already has 1.3m users
2. Switch to Digitisation is driving explosive demand gaps — Coding was in vogue, then Data Science, then Machine Learning, each of these waves emerged quickly and in Labour market terms almost instantaneously. That’s because as more services go digital the transition time to new technologies or processes, such as a new way to analyse data or market through new media etc, comes close to zero. As the technology emerges winners can gain big advantages by being early adopters — the need to keep up creates high demand for the skill — high demand for the labour and thus a monetisable market to which specialists can rapidly emerge to service
3. Supply constraints University side — US Universities graduated around 45,000 Computer Science students in 2017 and online options such as Treehouse are graduating in the tens of thousands. Sebastian Thrun, founder of Udacity has openly stated that Udacity was created to fill these critical shortages. Furthermore universities are not well equipped, at present, to meet such gaps — research staff tend to drive curriculum and teaching is of course limited by the number of teaching staff available.
4. Demand-driven curriculums — Universities teach for subject mastery with an implicit gearing up towards research — Masters at least traditionally were stepping stones for doctoral research even if they’ve since become a form of topping up for the job market. By contrast, Specialists teach the minimum about for the market demand — What is the quickest way to get someone into a job as a Coder or a Data Analyst?

Specialist platforms are not just the beneficiaries of rapid and well-targeted curriculums. Specialisation allows a platform and pedagogy to be customised for a particular subject; think Duolingo for language or Treehouse’s in-built coding console. Their speciality also enables them to innovate at faster rate on product features. Specialists can also operationally align their company and business model to the market — adding relevant courses faster (they tend to own their own content) and creating value add layers such as job and interview support.

Is it all bad news for MOOC platforms? MOOC platforms need hardly be passive participants in such a contest but they and their partners will need to react to this more dynamic environment if they wish to retain their or expand their position within the professional skills market. Some of that will involve more dynamic partners able to respond to market shifts. Another critical battleground will be that of credentials — as yet there is a confusing array of providers and credentials. The lack of awareness and trust makes it harder for learners to pay — as employers may not know of or value any one learning offering — however real. edX’s Micromasters and Coursera’s MasterTracks are both ways of launching credentials that combine the best of online (accessibility, flexibility and cost) with the best of University (high quality learning experience and brand).

MOOCs have proven the Pandora’s box for online learning. Universities started in the driving seat but now online learning has evolved with its own momentum and is challenging universities in key markets — especially the Master’s degree. Universities could and should compete for this — in a maelstrom of learning options — their trust and quality ought always to be accessible to those seeking it. It is the job of MOOC platforms to enable their partners to see the problem and act with agility to capture the market. The stakes are high — given the winners of the professional market will have a huge say in how and what workers in the 21st century learn.