Are we Gambling the Fate of Our Language School?

Are we gambling the fate of our language school? Are you a gambler? Most language school owners tend to be relatively risk-averse…so why are so many owners betting their entire business on the business of teaching English staying the same?
The majority of language schools are doubling-down on marketing, sales channels and teaching formats that peaked 8 years ago. There are three disruptive trends that are changing the competitive landscape for language education: Digitisation, personalization, and globalization.

Digitisation

The world has moved from storing our knowledge on paper to the computer chip to the cloud.
This has already transformed industries. Music went from the CD’s to the mp3 to streaming. Spotify has over 40 million subscribers and Apple makes $10 billion dollars each year just from Music.
What about film and movies? As consumers, we have gone from video cassettes to downloads to video streaming. Blockbuster went from a $5 billion dollar valuation in 2004 to bankruptcy 10 years later. Conversely, Netflix has become a $100 billion dollar company and is adding 10 million new users every quarter.
Taxis provided transport at seemingly extortionate prices for decades due to restricting supply to push up prices. In 2013, a taxi medallion in New York city was worth as much as $1.3 million, however, due to competition from ride-hailing apps like Uber, taxi medallion prices have been pushed down to one-tenth of that value 5 year later…
What can the education sector learn from this disruption?
Internet infrastructure is improving in every region in the world, cheap computers and tablets are flooding new developing markets and student preferences are driving up the demand for anything online…

Personalisation

We’re not all the same and consumers are voting with their wallets on products and services to speak to them on a personal level.
This trend has absolutely had an effect on education. Governments are being challenged on their factory-approach to public school education. Schools like the Alt School are leading the future towards personalized learning paths. Teachers are thinking about the individual, not just the group as every student is different and a one-size-fits-all approach often doesn’t work.
Education technology, algorithms and artificial intelligence is adding fuel to this trend. Just as Facebook has got better at showing you more relevant content; artificial intelligence can make learning more relevant. This will dramatically improve the effectiveness of online teaching and education in the future.

Globalisation

Borders are blurring thanks to international trade agreements, technology, and the internet.
The number of the international student has quadrupled between 1990 and 2014 to reach five million students. This is expected to double again in another 7 years but the distribution can change significantly.
For example, Trumps trade policies are pushing students, especially from Muslim-majority countries to favor Canada over the United States. How quickly government policies can change a country’s education prospects…
Hong Kong, Sydney, Auckland, London, Singapore are wonderful places to live but they are also very expensive places for students to live and study. It can be twice as expensive to live in Hong Kong compared with a major city on the mainland. Will school owners in cheaper cities be able to take advantage of this disparity?
Will the improvements in quality and access to education in developing countries undermine the fortunes of physical language schools in major centers?
Web-conferencing and virtual classrooms enable borderless education. Pearson recently sold Wall Street English (one of the largest language school franchises in the world with 450 schools globally) for around $300 million. Meanwhile, VIPKid, a US-based online school focused on Chinese learners, raised $500 million this year to value it at over $3 billion.
What does this say about the value investors place on physical vs online offerings?

Implications for language schools

Just because there are trends that challenge the safe assumption that language schools will be able to continue operating as they always have, it does not mean that a tsunami of change on its way. Education has proven to be a laggard when it comes to market disruption but it doesn’t hurt to be careful.
You may not be ready for a big change but you may be open to exploring new ways for a language school to make money other than getting ‘more bums on seats’. This might look like offering live online classes, building self-paced courses or investigating markets will less competition.
There are a number of ways that a physical language school can hedge its bets. This deserves its own article but will undoubtedly require something to change and some form of investment to meaningfully reduce your risk.
What do you think? Are the trends explored in this article (digitization, personalization, globalization) going to have a slow or fast impact on the language learning sector?
Please add your thoughts below in the comment section
Written by Alex Asher
Head of customer success at LearnCube

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