The Future of Education: Unbundled & Content-Driven

COVID-19 is accelerating the move to online learning, unbundling education as a service that will increasingly adopt the business model of a media product

As a fundamental industry within any civic society, education has been rather resistant to tech-led disruptions. While in the U.S. private schools may have better access to new technologies and learning equipment than the public ones, they run on similar business models regardless of their primary sources of funding, and the learning experiences they delivered in 2019 were, for the most part, the same to what they were in 1999. The education experience that most schools offer has not changed much in the past 20 years or so, give or take a few iPads.

Now that dramatic changes brought about by the pandemic have pushed millions to adopt online learning as schools remain closed, a paradigm shift is gradually taking shape in education that will trigger a major transformation. COVID-19 has forced most educational institutions to pivot online and deliver part of their services remotely. This has, and will continue to accelerate the “media-fication” of education, especially for higher education, with long-lasting implications on how we learn and how educational institutions are run in the future.

Online Learning, Accelerated

Like many things during this pandemic, education went virtual out of necessity. On March 6, the University of Washington became the first major American college to shut down campus operations following major outbreaks in the Seattle region. Ten days later, over 250 colleges and universities in the U.S. followed suit. By March 22, over 118,000 schools in the U.S. closed, leaving nearly 54 million children out of school. By the end of April, UNESCO estimated that roughly 9 out of 10 schoolchildren worldwide were affected by school closures.

While some schools and colleges remain hopeful about resuming at least some on-campus classes and operations in the fall, others are already planning to keep classes fully online for the upcoming semester. Putting aside the ongoing debate on whether or not to reopen schools and a potential teachers’ strike, it seems safe to assume by now that, until a vaccine becomes widely available, schools will not be back to their full capacity. Four-year colleges may face a loss of up to 20% in fall enrollment, according to the latest estimates by Simpson Scarborough.

Taking into account the lost revenue from summer school, food services, and more, in addition to a potential cut in school funding due to shrinking state budgets caused by the recession, it is questionable that some schools will ever reopen to their pre-pandemic capacity. In this likely scenario, online education becomes as much a raison d’etre for schools as a practical solution.

In this likely scenario, online education becomes as much a raison d’etre for schools as a practical solution.

Online learning has been slowly developing and steadily gaining momentum since the mid-2000s before the pandemic thrust it into the spotlight. In fall 2018, there were over 6.9 million U.S. students enrolled in online courses at degree-granting postsecondary institutions, according to data from the National Center for Education Statistics. Many massive open online course platforms (MOOCs), such as Udemy, Coursera, Lynda, and Udacity, that have been gaining popularity before the pandemic are now attracting new users.

This accelerated shift is leveling the playing field and reshaping the competitive landscape. Ironically, students at public colleges or universities are far more likely to have taken an online class than those at private schools, because public schools are more likely to have incorporated online courses as a cost-saving measure. According to data from College Pulse, 66% of state-school students say they have taken an online course at some point, while only 36% of students at private colleges or universities say the same.

As online learning becomes more widely adopted, it opens doors for schools and educators to experiment with new ways to organize how we learn. For all the promises on enabling networked, peer-to-peer learning programs, flexible mini-degrees and micro-learning courses, hyper-personalized curriculum and syllabi, and individualized learning goals and tests, the most impact this shift towards online learning will have will be on how education as a business is run.

Education as a Media Business

With schools shut down and classes becoming webinars, education has suddenly pivoted from an in-person service to a virtual experience conducted over live video. In some ways, this transforms education into a media business predicated on interactive video content, a vastly different medium than what most educators today are used to and one that most educational institutions today are ill-equipped to produce, distribute, and market effectively.

As is often the case when offline businesses become digitized, the process of digital transformation begets new business models. Whereas traditional in-person education is a business of scarcity, predicated on capacity of attention and classroom size, online education follows the economy of abundance. Breaking down geographical barriers, every student would have access to a wide range of educational content that they find best suited to their levels and styles of learning.

Interestingly, the way that the newspaper industry has evolved over the past decade offers some strong indications as to how the higher education industry will evolve over the next decade as more classes move online. The big names, like The New York Times and the Harvards of the world, will be fine coasting on their prestigious brand to corner the high-end subscription market, whereas the digital upstarts, like Vox Media and the MOOCs, along with the small community colleges that have already integrated online courses, will do just fine in this economy of abundance too. It’s the middle-sized institutions — the state colleges and small private colleges — that are at high risk of losing their audiences and thus their place in the ecosystem, just as local newspapers lost their main competitive leverage of controlling regional distribution as news consumption rapidly moved online.

And because teaching is no longer an in-person job, in the future, a teacher’s job will be more akin to a YouTuber or a Twitch streamer, creating video essays and live experiences that maximize audience engagement, most likely on a semi-freelance basis. Schools, naturally, would take on the role of a content curator and/or aggregator to put together collections of educational content that provide a coherent and comprehensive coverage of a certain field of study. And much like how some established journalists and writers are leaving publications to start their own subscription newsletters on services like Substack, some standout educators could go directly to students. However, without schools to certify their classes and make them part of a curriculum, most students likely won’t invest their time in courses that don’t count towards a degree.

In the future, a teacher’s job will be more akin to a YouTuber or a Twitch streamer, while schools take on the role of a content curator and/or aggregator.

To that end, education will become primarily a media business that hinges on selling interactive education content, or access to said live content. And like any media business, it will need to cater to the media habits and preferences of its target audience — in this case, the Gen Z students. As the first digital-native generation, live streaming boring lectures in front of a blackboard likely won’t be able to hold their attention; instead, the educational content of the future will likely be heavily visual and interactive, operating more like a video game than a stale webinar presentation. As with any media business, content is king, especially when a better course is just a click away.

Unbundling Education

Notice that the predictions in the last section mainly focused on higher education, for a good reason. As much as lectures are easily reproduced and distributed online, there are other parts of education that are not as easily replicated online. For the future of education to truly unfold, it will have to be taken apart first.

When we talk about education, we are actually talking about a host of services that have been bundled together and sold to parents and students. For grade schools, there is the knowledge learning component that teaches the kids and teens basic knowledge over a wide range of common topics. Equally important is the peer socialization it provides for the kids to develop the necessary social skills that prepare them for entering society, as well as the daycare function it serves to take the kids of working parents’ hands for six to eight hours during weekdays.

A similar bundling of services exists in higher education too. The knowledge learning part becomes more specialized and focuses on career preparation, while peer socialization forms the basis of one’s adult social network. For many, going to college offers an escape from home, a safe environment to experiment and figure out who they are. Of course, there are many paths to self-actualization, but living on campus creates a unique immersive learning environment that is conducive to self-discovery as one enters early adulthood.

As the education industry undergoes digital transformation, different parts of the bundle will migrate online as a varying set of services, presenting new challenges and opportunities.

The knowledge learning part is already being digitized and transformed into content. From the aforementioned MOOCs providers to people making educational TikTok videos, the learning part is relatively easy to figure out compared to the rest of the education bundle. Software is eating education: Whether it is language-learning apps, virtual tutoring, video conferencing tools, or online learning software, there has been a significant surge in their usage since COVID-19 started. Google Classroom users doubled as lockdown orders spread, and new online learning products from the likes of Microsoft and LinkedIn could further shake up the market.

Software is eating education, and the learning part is relatively easy to figure out compared to the rest of the education bundle.

For now, while classes have moved on to Zoom, socialization lingers on social media in a rather disjointed manner. Dedicated chat groups for classes to facilitate peer discussion and interactions are certainly worth a try, And other sorts of typical social events at schools (school rallies, proms, football games, after-school clubs, etc.) could move to various digital platforms (Zoom, esports, Twitch, Houseparty, etc.) But it will be a challenge to recreate the socialization in school online without some diligent moderating to curb the dark side of campus culture (bullying, peer pressure, social cliques, etc.), and even then, there is no guarantee that these school-sanctioned official social channels could beat the private social channels that most Gen Z are already on.

And then there is the care-taking part that is crucial to grade school education. These past five months have been tough on everyone, and it has been especially difficult for working parents with children at home. Barring babysitting robots, there is no clear technological solution to this component of education, which may never be successfully digitized. However, the emergence of “pandemic learning pods,” where several families with kids in the same grade form a “pod” and share the cost of hiring a private tutor to teach and supervise the group at different homes on a rotating schedule, points to a potential solution to this challenge by distributing daycare services amongst communities. Nevertheless, it is a costly solution that could exacerbate the existing inequality in educational access.

Given the immense challenges in digitalizing the non-learning components in grade school education, it is safe to assume that once schools can safely reopen, most parents will likely opt to send their children back to school for the peace of mind. In higher education, however, the need to keep things as an expensive bundle would be much less acute. For all intents and purposes, this pandemic may mark the end of a traditional higher education experience for many prospective students in the U.S.

A Cultural Shift Against Higher Education

As college expenses continue to rise at a rate that’s greater than inflation and student debt is reaching record highs, young Americans are beginning to change how they are thinking about college. Growing up in the shadow of the 2008 recession and living through this pandemic, Gen Zers are shaping up to be fiscally conservative and rightfully critical of the value proposition of higher education. With 4 in 10 adults under the age of 30 now saddled with student-loan debt, 66% of Gen Z surveyed say they plan to attend college in-state to save on tuition.

While a high percentage of young people are still choosing to enter college, mostly for securing better career prospects, overall undergraduate enrollment has fallen by 8% between 2010 and 2018, thanks to falling birthrate and the percentage of young people going to college no longer rising significantly anymore. Should the unbundling of higher education come true, then there would be fewer incentives for Gen Z to choose college over alternative solutions.

One potential solution for the student loan debt crisis is the type of income-sharing agreements (ISAs) that some schools tout as a way to increase accessibility by taking a percentage of future income in lieu of charging tuitions upfront. Lambda School is one famous example, although its implementation of the ISA model is not without dissent and controversy. If the primary motivation for students to go to college is employment-driven, then it seems only fair that the cost of higher education should be tied to career prospects and future earning capacity.

In addition, vocational schools are also becoming popular again thanks to their shorter time requirement, lower entry barrier, and, when compared to certain liberal arts degrees, better job prospects. The National Center for Education Statistics cites a rise in trade school enrollment, from 9.6 million students in 1999 to 16 million in 2014. Still, negative attitudes and misconceptions persist even in the face of the positive statistical outlook for the job market for these middle-skill careers.

Looking ahead, the skills we learn in school today may not be what we need in the future, and tech-led disruptions are only going to accelerate, thus making lifelong learning a necessity for the majority of the workforce. Learning on the job will likely become the norm, and a collection of corporate training certificates will become the new graduate degree. Given that 84% of people learned things in school that they’ve never used after graduation, it might just be a far more efficient way to learn by matching workforce capabilities with each job’s required skill sets. After all, research has shown that intelligence scores are a much better indicator of job potential than education levels. If that’s the case, then many higher education institutions would truly face an existential crisis with no easy answer.

Learning on the job will likely become the norm, and a collection of corporate training certificates will become the new graduate degree.

Want To Learn More?

The education industry is undergoing a significant transformation that will not only redefine how we learn and how we parent, but also many other socioeconomic implications. New technologies such as AR, VR, and AI will be increasingly incorporated into classrooms, and education itself will continue to evolve along with the changing nature of work, which calls for new subjects to be taught as well as a more flexible model of lifelong learning.

The Lab is closely monitoring the coming disruptions and charting the developments in the education industry. If you wish to start a conversation around the key trends shaping the future of education, and discuss how your brand can leverage these opportunities, please reach out to our Group Director Josh Mallalieu at josh@ipglab.com.