The US Market for Self-paced eLearning Products and Services: 2010-2015 Forecast and Analysis

The US market for Self-paced eLearning products and services reached $18.2 billion in 2010. The demand is growing by a five-year compound annual growth rate (CAGR) of 5.9% and revenues will reach $24.2 billion by 2015.

This report forecasts five-year online learning expenditures by eight buyer segments: consumer, corporate, federal government, state and local government, PreK-12 academic, higher education, non-profits and associations, and healthcare.

The five-year compound annual growth rate (CAGR) growth rate for Self-paced eLearning across all eight of the buyer segments is 5.9%, but growth is much higher in specific segments. For example, growth rates in the PreK-12, healthcare, and association segments are 16.8%, 16.3%, and 14.3%, respectively.

The rate of growth in the PreK-12 segment is due to the relentless migration to online content formats, and also due to the proliferation and success of for-profit online schools. Yet, buying behavior is erratic as schools struggle with budget cuts.

The rapid growth of virtual schools, the dramatic increase in online students, the recession, and state budget cuts are acting as iterative catalysts for Self-paced eLearning in the PreK-12 segment.

For example, budget cuts have prompted schools to reduce spending on summer school and classroom-based credit-recovery (making up for a failing grade) programs and increase spending on self-paced products and services. It is now more cost efficient to outsource credit-recovery programs to commercial online providers.

The primary catalyst driving the strong virtual school growth in the US is the economy. State-run virtual schools used to target courses that were not offered in local districts or not available to rural students. Now, as a way to cut costs, they are targeting core curriculum and supplemental as well.

The explosive growth of online enrollments in both academic segments in the US has created a boom market for Self-paced eLearning products in the PreK-12 and higher education segments.
The healthcare segment has been immune to the recession. Since the recession began, the healthcare segment has added over 866,000 jobs. According to a May 2010 report by the US Bureau of Labor Statistics (BLS), the healthcare segment has been adding an average of 19,700 jobs a month over the last two years.

Obviously, there is a strong demand for training and education in the healthcare segment. A major challenge for suppliers competing in the healthcare segment is identifying the buyers. This report describes the buying behavior in this complex segment.

Associations spend over $6.2 billion annually on educational events and until recently, most of those events were in physical venues. Associations were once slow adopters of learning technology in general, but this is no longer true. This segment is moving fast to Self-paced eLearning. The current forecast has been revised significantly upward from previous forecasts.
In the past three years, across the entire market, the demand for Self-paced eLearning has slowed. This general slowing is due to three market factors:

• Commoditization of platforms and tools
• Pricing pressures in the corporate segment caused by the slow economic recovery
• The growing tendency for buyers to purchase other types of learning technology products.

Commoditization (for any product) occurs when demand is very high and competing products lack significant differentiation in the perception of customers. Customers shop for price. Learning platforms and authoring tools are now highly commoditized, particularly in the corporate segment.

Although the overall corporate growth rates are flat, demand is still quite strong, and the revenues are very high. The corporate market was an early adopter and companies continue to purchase Self-paced eLearning products. The corporate segment still represents the best revenue opportunities for suppliers.



There is now clear evidence that other learning product types such as Mobile Learning and Social Learning are cannibalizing Self-paced eLearning revenues. This is particularly prevalent in the consumer and higher education segments.

In the consumer segment, the growth rate for Self-paced eLearning content is now flat-to-negative at -1.9%, yet the consumer growth rate for Mobile Learning content is a healthy 18.3%. Social-based language learning sites are now very popular in the consumer segment as well.
The "online population" in the higher education segment is growing at a rapid rate. Lecture Capture Systems are now in high demand in the higher education segment and are dampening the growth of Self-paced eLearning.

This is called "product substitution" in a market and can be a significant threat to suppliers. Recommendations on how to deflect this threat are included in the final section of this report.