According to a recent report released by Eduventures, an independent research firm focused on the learning markets, the online distance education market is heating up. The report predicts that enrollment will exceed 1 million students in 2005, representing a market of more than $6 billion. The report, titled “Online Distance Education Market Update: A Nascent Market Matures,” analyzes the development and maturation of the market, identifying the key causes of growth. Sean Gallagher, a senior analyst for Eduventures and lead author of the report, said the focus in online distance learning will turn to quality over the next few years, and new brands, institutions and types of programs will emerge. “Overall, online education is helping integrate lifelong learning into people’s lives,” Gallagher said. “That’s the primary driver—the economic and social needs for education. And I think this is a vehicle that allows working adults in particular to access higher education, whether it’s something short, like a certificate or a continuing education or professional development course, or whether it’s a full degree program, from the bachelor’s level to the doctoral level.”
Online distance education has been gaining in credibility in recent years. Many people—both students and their employers—were skeptical of the quality of distance learning when it first hit the Web. But Gallagher explained that although there is still development and experimentation taking place, online distance education is gaining credibility. “In the past, it was more on the fringe or on the leading edge of innovation in higher education programs,” Gallagher said. “But as the report highlights, it’s now really being recognized as something that’s more credible and viable.”
What is ultimately driving this demand is the need for easy access to quality higher education programs, combined with the ongoing general demand for higher education, a growing acceptance of technology and the development of new technologies that can process more information at higher speeds.
“The demand has always been there on the student side—the demand for higher-ed degrees—so that follows the broader trends in our economy that just point to the importance of college-level education,” Gallagher said. “And now we have broadband infrastructure coming along, and people are very familiar with the Web. For a number of years they’ve been accessing their news, doing their banking and booking their flights on the Internet, so a lot of people have become familiar and integrated online media into their lives.”
Traditionally, higher education has been tied to a geographical location or region. But online distance education benefits from new technology developments, allowing it to be delivered to wider and wider audiences on a just-in-time, in-the-right-place basis. Availability of Web-based distance learning has been increasing dramatically over the past five years according to the report, and now most U.S. colleges and universities are offering online education in some form or another—through graduate certificates, professional development courses or degree programs. According to the Eduventures report, the market for fully online distance learning will grow 38 percent over 2004, reaching revenues of more than $5 billion.
Gallagher said he was surprised by the magnitude of this growth. “In essence, a lot of institutions are meeting even greater success than they expected to in terms of the demand for online education and how rapid the uptake has been,” he said.
Leading this growth are for-profit institutions, which have the support of marketing dollars in addition to a first-mover advantage, Gallagher explained. “On the whole, there’s more of a cautious approach on the nonprofit side toward online education, and I think rightfully so, with concerns about quality and financing it and developing the programs,” Gallagher said. “The for-profit institutions, on the other hand, recognized the market opportunity and sort of jumped right in full-steam ahead, developed some very high-quality programs, and they’ve been aggressively marketing them.”
Aside from spending more on marketing, many for-profit institutions have a national presence, as opposed to the regional focus of many nonprofit institutions for higher education, like community colleges and universities. But many of these nonprofits have a mandate to expand nationally, said Gallagher, which will ultimately provide more opportunities for students to get the learning they need in the institution of choice. “They want to grow their impact on people’s lives, so they have continuing education and distance education units,” Gallagher explained. “However, they have limited budgets compared to the for-profit financing model.”
Still, Eduventures predicts that the nonprofits are poised to become stronger competitors in the online distance education market in the years ahead, mainly due to the respect their brands garner, the reputations they have built in local markets and increasing investments in online education. “Many of the online education markets, interestingly, are local,” Gallagher said. “So if you’re a student in Boston or elsewhere, the first institutions that come to mind are the local institutions that have a campus you’re familiar with. And the local market marketing and reputation amongst employers is going to be very important versus studying in an institution that’s across the U.S.”
He added, “We aren’t limited by geography, and if the best program in the area where you want a degree is halfway across the country, you may well be able to earn a degree from that institution just sitting in your home, which is just amazing in terms of the quality of the product you can access. This just wasn’t possible before.”
This spells great benefits for organizations that choose to outsource learning to higher-education institutions. Learners can now access higher education from any location at the time it is needed, spelling less hours away from the workplace. Learners and their employers can also benefit from the many blended offerings being developed by for-profit and nonprofit higher-education institutions.
“Increasingly, we’re seeing programs where you combine on-campus and online study, and that gives you some of the benefits of the classroom environment, as well as some of the convenience of the online environment,” Gallagher said. “The for-profit institutions have a network of nationwide campuses in many cases. Your typical university is only a local or a regional institution; it may attract students nationally, but it’s to come to that metro area. If your employer is sponsoring a program from the University of Phoenix, for example, chances are there’ll be a campus nearby where you can take one course and take two online courses, or take two on the campus and one online. That may not be the case with other institutions.”
Still, Gallagher explained that even for the nonprofit institutions, the lines between online and on-campus education have been blurring in recent years. “In the future, it’s going to be difficult to make distinctions about what type of program it is because there will be a level of integration that we haven’t historically had,” he said. “It provides more options for the student. If you’re not comfortable with online education but you like the convenience benefits, the classroom experience may be the grounding that you need. And if you’re looking for campus-based education, you can add to the convenience by doing part of the course or one of the courses within your program online.”
For more information on Eduventures’ research, visit http://www.eduventures.com.