China’s online K12 education market has kept a growth rate higher than 30% since 2012 and rapidly recovered when it dropped to 21.4% in 2015. In 2017, its revenue attained 29.9 billion Yuan with a growth rate as high as 51.8%. iResearch holds the opinion that the main reason for the tremendous growth is the booming of one-to-one course live streaming , a clear profit mode that rescued some companies from poor profitability in 2015 and 2016. It is expected that online course live streaming will remain the main contributor to the revenue of online education companies and lead the establishment and verification of other unclear profit model in 2018 and 2019, and the revenue of the industry will maintain a growth rate higher than 40% until 2020 and then will decelerate.
When online K12 education was at its initial stage, the industry chain was very simple: to develop tools, establish platforms and make content with technological support so as to reach individual users after conducting marketing. As some online education companies expanded, technology providers, teacher resources and contents for them were emerging. Then with the further development of the industry, the share of offline services increases significantly in the whole industry chain. The companies once again attach more emphasis on offline marketing and the business mode targeting at offline business is molding. Meanwhile, online-offline cooperation was strengthened due to the monetization difficulty of online mode and the significant traffic shifting of offline venues. However, as offline forces have greater influence in the existing market, they have stronger right of speech, and schools and distributors who have large student base have the highest voice.
A lot of factors may cast influence on the concentration level of the market, for instance, demand of clients, features of products, development stages of industry and strength of companies, while the fundamental influential factor is the standardization level of clients’ demands. Different from industries like news, telecom, retailing and finance, industries like education, medical care and consulting in essence are service industry, and clients’ demands are highly individuation. Especially, in K12 education market, users have a wide range of learning demands and are faced with complex learning process, and thus the companies with more different detailed services may attract more users. Meanwhile, the high transmission capacity of online education allowed more room for niche brands. As online K12 education becomes increasingly mature, leading companies in different market segments will probably hatch out and thus form a differential competition pattern with multiple leading companies.