What growth strategies are being chosen in the Russian EdTech market?

Contents:

• In which directions do companies prefer to grow?
• What is more important to focus on first - technology or methodology?
• What can "take off" and "break" the market?

In which directions do companies prefer to grow

Some educational companies strive to expand their range, entering new niches and by increasing the number of products offered. Others choose a strategy of in-depth growth, focusing on strengthening their position in their field and becoming leaders in a specific market segment. This approach allows them to achieve high results, improving the quality and effectiveness of educational services.

In the field of EdTech for children, according to Sergey Veremenko, Deputy General Director of Uchi.ru, the number of potential users is limited by the number of schoolchildren. This creates certain challenges for companies developing content for schoolchildren, since the opportunities for scaling up are practically non-existent. Therefore, the only strategy that can ensure growth is to deepen existing offerings and improve the quality of educational content.

The Uchi.ru platform covers the entire school curriculum, but not all students find online learning suitable. In this regard, the company is expanding its capabilities in the field of additional education for children. Initially, the focus was on programming, but now the offering has expanded to include courses dedicated to the development of personal skills and human anatomy. This expansion allows students to choose tracks that match their interests and needs, fostering deeper and more comprehensive development.

Andrey Sizov, CEO of Foxford, shared strategies applied across various business lines. Foxford holds a leading position in the basic education segment, covering school subjects. However, the company is not a leader in supplementary education for children. Therefore, Foxford is focusing on expanding its offerings in basic education and deepening its supplementary offerings, improving both its product and distribution system. The goal is not only to catch up with competitors but also to surpass them by offering high-quality education.

In the field of continuing professional education (CPE) for adults, growth opportunities are significantly greater than in children's education. Large companies are striving to expand their offerings in both breadth and depth. Rustam Ainetdinov, Executive Director of Skyeng, and Pavel Moseykin, CEO of the educational holding company Ultimate Education, discussed this. Their strategies are aimed at creating more diverse educational programs and improving the quality of services provided, which allows them to attract more students and respond to growing market needs.

Rustam notes that Skyeng Holding's strategy is consistent with its core focus. In the language segment, the company strives to deepen its offerings and increase added value. In the children's segment, a "depth and breadth" strategy is being applied: initially, English classes were organized, then mathematics lessons were added, and ultimately, the project transformed into Skysmart, which offers a wide range of educational programs. Thus, Skyeng is actively developing its areas, focusing on customer needs and expanding its range of services.

Rustam believes that to achieve success, it is necessary to develop in both areas simultaneously. However, this is only possible with sufficient team resources, focus, attention, effort, financial stability, and profitability. If you have to choose one area for development, it is worth focusing on deepening your position. This will help strengthen your leadership in your niche, as whoever first masters the market depth will find it easier to maintain their position. It is very difficult to displace a leader in an industry, and whoever takes a strong position will gain a significant advantage in the future.

Pavel Moseykin emphasizes that despite the active expansion of Ultimate Education, including the recent addition of a new niche school, it is also important to deepen existing offerings. The educational technology market is changing, and consumers are becoming increasingly conscious of their choices. This requires companies to improve the quality and effectiveness of their services. Continuous improvement of the educational process not only meets modern user demands but also contributes to the long-term competitiveness of EdTech projects.

Pavel emphasizes the importance of creating unique products for participants in the continuing professional education (CPE) market. In a saturated market, the pursuit of innovation and originality is becoming a key factor for successful growth and development. Creating unique offerings will help you stand out from the competition and attract the attention of your target audience.

If EdTech schools and companies fail to differentiate themselves and continue to offer the same solutions, competition will become difficult and ineffective. It is essential that each market player develops their own unique offering and clear positioning. They must delve into product development and continuously improve their educational programs to attract users and ensure sustainable growth.

In the context of business development in the corporate training, secondary vocational education (SPE), and children's education segments, particularly promising areas stand out. Regarding children's education, it is worth noting that companies in the continuing professional education (CPE) sector find it difficult to integrate into this segment. This is due to the need to adapt to the specifics of children's education and the additional financial investments required. Nevertheless, children's education is a very attractive, rapidly growing sector, making it important for strategic development and investment.

Last year, children's EdTech actually overtook continuing professional education (CPE) in growth dynamics for the first time. Some experts believe that in the future, CPE for adults may lose its status as the largest segment of the EdTech industry in Russia, giving way to children's education. However, a slowdown in growth in this segment was observed in the first quarter of 2024, indicating certain difficulties and market instability.

Skillbox CEO Dmitry Krutov emphasizes the importance of transparency for EdTech companies in the eyes of investors. This requires them to transform into typical tech businesses with clear growth and EBITDA metrics. One of the global problems in EdTech is the insufficient completion of the investment stage, when startups receive funding for experiments and can effectively validate their business models. In today's environment, EdTech must adapt to market changes. It is necessary to focus on achieving stable growth rates and profits, and to ensure maximum transparency to attract investment.

Dmitry emphasized that as part of his expansion strategy, he identifies three main market segments.

• EdTech with a volume of 120-150 billion rubles;
• lifestyle education (schools on GetCourse and other platforms) - 200-250 billion;
• formal education (i.e. colleges and universities) - more than a trillion rubles.

He is confident that EdTech companies should focus their efforts on the formal education segment. This area allows for the integration of modern technologies into the educational process and improves the quality of education. A focus on formal education will open up new opportunities for growth and innovation in the educational sector.

EdTech will develop towards increasing market potential. Given the changed requirements, we will actively seek opportunities for growth in terms of both marginality and profit. Entering the formal education market, which is valued at 1 trillion rubles, is becoming an inevitable step for us. Although it may seem less technologically advanced, its size and potential make it attractive for further development.

What is more important to focus on first – technology or methodology?

When prioritizing development investments, many focus on different aspects. Some emphasize modern technologies, others – methodological approaches. There are also those who focus on improving the quality of products or on in-depth research of their audience. Determining the right direction for investment significantly affects the success of a business and its ability to adapt to market changes.

Rustam Ainetdinov believes that there is no universal strategy for business development, as everything depends on the individual goals of each company. He emphasizes the importance of investing in product development, marketing and sales, as well as the technological aspects of projects. He places particular emphasis on artificial intelligence, which is becoming a key element of a successful strategy. Investments in these areas can significantly improve competitiveness and ensure sustainable business growth.

A company's strategy plays a key role in its development, determining how to improve business processes. Key issues it must address include reducing costs, speeding up task completion, and improving service quality. Attracting more users and increasing revenue is also an important aspect. Technological solutions effectively contribute to achieving these goals, providing a competitive advantage and promoting the company's sustainable growth.

He noted that technology is actively used in his company for content creation, promotion, homework assessment, and shaping educational pathways. Rustam emphasized that technology implementation has now become much more accessible. Although technology cannot replace teachers, its use can significantly facilitate their work.

Dmitry Krutov expressed the opinion that the main problem in the EdTech sphere is not in technologies, but in methodology. This is especially relevant in the context of working with learning objectives in mass education. Effective integration of technology into the educational process requires a rethinking of approaches and methods, which will be key to the successful development of the educational environment.

We target a wide audience with varying levels of preparation, which makes our offer unique in the field of mass education. EdTech plays a key role in democratizing education and increasing its accessibility. Creating a successful educational experience in a small group is no easy task, but we teach over 700,000 students, and approximately 20,000 new students join us every month. Our goal is to ensure results for each of them. We recognize that we work with multiple target groups, each of which requires developing an individual, non-linear learning trajectory. It is important to understand how to effectively engage with each student and what will be most beneficial for their educational process.

Dmitry noted that modern technologies do indeed accelerate the content creation process. However, speed is not the top priority. What's more important is the quality of content, including its verification, the reliability of course speakers, and other aspects that influence its value.

The founder and CEO of Skillbox emphasizes the importance of investing in the quality of both products and communications with key market participants. Skillbox identifies eight target groups with which it is essential to actively engage. These include universities, expert teachers, employers, students, online schools, industry partners, investors, and education experts. Such interaction is critical to accelerating the process of legitimization of EdTech, which, in turn, contributes to the development of educational technologies and increases their value in the market.

Read also:

Unified standards for assessing the quality of online courses: research results

In recent years, online education has become an integral part of part of the educational process, which has led to the need to develop uniform standards for assessing the quality of online courses. The results of the study show that such standards can significantly increase the level of trust in online education.

One of the key aspects of quality assessment is course content. High-quality online courses should be relevant, structured, and provide clear learning objectives. The level of training of instructors is also important; they must possess not only deep knowledge in their field but also online teaching skills.

The technical aspects of the platform also play a significant role. A user-friendly interface, stable operation, and accessibility of materials ensure a positive learning experience. It is important that courses include interactive elements, such as tests and assignments, which facilitate deeper learning.

Student feedback must also be taken into account. Systematically collecting and analyzing feedback will help identify the strengths and weaknesses of the course and make any necessary adjustments.

Thus, unified standards for assessing the quality of online courses can become the basis for increasing the effectiveness and popularity of online education, ensuring a high level of satisfaction for students and employers.

Pavel Moseykin emphasized the need to develop methodology in the field of education, noting that technology should not be implemented for the sake of technology itself. He emphasized that EdTech companies should focus on improving the quality of customer service and personalizing the learning process. Furthermore, the CEO of the educational holding Ultimate Education noted the importance of the human factor, emphasizing that without human participation, modern technologies cannot function effectively.

Andrey Sizov noted that Foxford does not have sufficient resources to invest in its own artificial intelligence technologies. Instead, Foxford actively uses neural networks from other developers to generate content. He emphasized that the company's methodology is key, but there are certain peculiarities, since Foxford works in the field of school education. The curricula with which the company works depend on the requirements of the Federal State Educational Standards (FSES), which change only slightly. This means Foxford doesn't need to regularly update its methodology. Therefore, the company currently employs 70 methodologists, compared to 400 in 2021.

At Uchi.ru, as Sergey Veremenko noted, special attention is paid to gamification of the educational process. Specialists strive to integrate more game mechanics into the content, which helps increase student engagement. Another important area of ​​development is extracurricular activities that combine various skills and gaming technologies. Sergey cited Olympiads on economics and online safety as examples. These initiatives not only promote knowledge but also develop practical skills necessary in the modern world.

It is important to invest in deep research of your audience to better understand their needs and product preferences. This knowledge will help develop products that are truly in demand and will increase customer satisfaction.

What Can "Take Off" and "Break Through" the Market

Experts discussed potential disruptors in the EdTech industry. In particular, they discussed new technologies and formats that could lead to significant growth in the educational sector. Innovations such as artificial intelligence, adaptive learning, and virtual reality can significantly change approaches to learning and increase its effectiveness. It is important to pay attention to how these technologies can transform educational processes and make them more accessible to a wider range of users.

Dmitry Krutov identified several key factors that could influence market development. These drivers can significantly change the dynamics and trends in various industries. Analyzing their influence will help better understand the current situation and predict the future.

• Mobile formats that allow learning using a mobile phone. Dmitry is confident that educational companies' LMSs could "break down against messengers or other similar platforms." He explained this by the fact that many people lack the appropriate technical resources—that is, powerful enough computers—to learn, for example, programming or design. Therefore, companies are interested in teaching coding using a mobile phone. According to the head of Skillbox, "it's a matter of a year or two." Multi-format—when companies offer both online and offline products with different focuses. Dmitry believes that the "confluence of formats," which Skillbox offers through online courses, the company's offline schools, joint projects with universities, and its own Digital College, will allow for a significant leap in the next two years. Reducing the cost of VR technologies. According to the Skillbox CEO, they enable a new type of "connectivity that could change everything in EdTech." He explained that this refers, for example, to digital classrooms, where, thanks to special headsets, people physically located in different locations can study virtually, but with the impression that they are sitting at neighboring desks.

Rustam Ainetdinov noted the potential of mixing formats. This strategy allows for the creation of unique and engaging products that can attract a wide audience. Mixing formats opens new horizons for creativity and innovation, allowing for the combination of elements of different styles and genres. This approach can significantly increase interest in projects and improve their competitiveness in the market. It is important to keep in mind that successful format mixing requires a thorough analysis of the target audience and their preferences, which in turn facilitates the creation of high-quality and in-demand content.

The winner will be the one who can successfully integrate various learning approaches. This includes individual lessons for students who require additional support, as well as a self-paced learning format for those who prefer to solve assignments independently. It is also important to use group formats and the flipped classroom method. Those who can harmoniously combine all of these educational cycles will create the most attractive and effective educational environment.

Pavel Moseykin noted that short-term educational programs can become an important driver of development. Such programs allow for the rapid acquisition of specific skills and the achievement of tangible results in the shortest possible time. This is especially relevant in a constantly changing labor market, where prompt solutions for professional development and adaptation to new requirements are in demand. Short-term training provides the opportunity to effectively develop professional competencies and quickly respond to changes in the field.

According to the expert, the player who is the first to successfully implement a high-quality "skills-based" format will be able to take a leading position in the market. With the introduction of such programs, significant changes will occur in the industry, and companies will have to quickly adapt their technological solutions to meet the new conditions. This will create new opportunities for business and require flexibility in approaches to technology.

Sergey Veremenko highlights peer-to-peer education as a promising concept. In his opinion, this trend concerns not so much the EdTech market as traditional schools. He notes that at the moment there is no high-quality product implementing this training format. However, when such a product is developed, its popularity will increase significantly.