OPM Market Landscape And Dynamics: Spring 2023 Updates

Wow. Just wow - the last twelve months have been something.

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On to the update.

During several keynotes, podcast interviews, and panel sessions over the past two years, I have described how the Online Program Management (OPM) market was facing enormous pressures and would change dramatically. I took some heat in private conversations for overstating the case, but as the past 12 months have shown, it turns out that I understated the turmoil and change of the market.

With that in mind, it is time to update our two main OPM Market graphics that were last shared in the Summer 2022 update.

OPM Market Landscape

• Market valuations of publicly-traded OPM companies have continued to drop, with 2U/edX, Coursera, and Keypath all down 75% or more from March 2021.

• Pearson tapped out of the market, agreeing to sell its OPM business to private equity firm Regent.

• Zovio is no more. It has ceased to be.

• FutureLearn sold the remnants of its business to a for-profit system, and it now has the most obnoxious website of any OPM provider, past or present.

• Byju’s, which (according to multiple media accounts) had been considering an acquisition of 2U/edX or Coursera, abandoned these plans to go off and deal with its own financial crisis.

• Noodle acquired South Africa-based Hubble Studios.

• The Government Accountability Office (GAO) released a report on the OPM market, triggering (but not causing) official efforts to make massive regulatory changes.

As readers of On EdTech know, this last bullet is now the driver for market dynamics for 2023 and probably 2024.

As always, please note that this view is intended to give a visual overview of the market landscape and is not mean to be comprehensive in terms of vendors represented. This is particularly true in the smaller customer base and fee for service categories.

OPM Market Dynamics

When we first came up with the Mad Max graphic in 2018, it was intended to counter the golly gee, the OPM market is rich, well-funded, and growing like crazy coverage, or the flip side of these companies are all getting rich pulling profits out of the schools coverage that we saw in EdTech and national media through 2022.

This year there are two primary changes with the overall message of the graphic:

• Online enrollments in the largest OPM market (US graduate schools) are no longer growing - they’re dropping and in structural ways. OPMs are still chasing those enrollments and tuition revenue, but the dynamics change when the target has its own problems.

• The small threat from the Department of Education and its activist allies to the OPM market has become a major threat, with an all-out assault.

We still get a picture of a chaotic market that is not for the faint of heart, and one that is seeing consolidations and category changes, and these changes will continue. All of this in a Mad Max-style pursuit of college online course and program revenue (whether rev share or fee-for-service or a blend, and whether degree- or certificate-based).

Note the changes in the program revenue target:

as well as the central market threat from ED regulations, going after both revenue sharing and TPS status, all in the name of protecting the helpless:

with 2U being the chosen target to personify the regulatory actions:

We also see Pearson getting out of the OPM business:

Zovio’s crash:

and Byju’s flying away from the scene.

ASU+GSV Angle

Next week I (along with Glenda Morgan) will be at ASU+GSV, and I will be on a panel with Ryan Craig, Mike Goldstein, Katherine Lee Carey, and Toby Jackson. The session is titled “Decoding the Dear Colleague Letter – What’s a TPS?!”, scheduled for Wednesday at 11am PDT. I am eager to find out at the conference if the investment community is aware of the significance of ED’s targeting of the OPM market, at least for revenue sharing business models, and of the potential impact of TPS guidance.

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Update 4/13: Added bullet on Noodle acquiring Hubble Studios.