EDTECH WARS - A MONEY MAKING BUSINESS
Updated: Mar 1
- By Lakshya Bhambhani and Parineet Kaur
Growth of the ed-tech industry during the pandemic
With the emergence of COVID-19 and everyone being cocooned in their homes, one major player that came out as a winner in this tough battle was the ed-tech industry. Educational Technology, commonly known as EdTech, is the new hot tea on the table. It has always existed, but its popularity and growth are now in the news. India's shift to digital teaching in the past 2 years has been rapid and is still growing.
The immense rise in EdTech users due to the nationwide lockdown has provided a significant push to this sector in India, which is relied upon to develop at a CAGR of 52% to turn into a 1.96-billion-dollar industry by 2021. The key development drivers propelling EdTech in India are the capacity to serve a large audience at essentially lower costs compared to traditional classroom learning, critical growth in internet and smartphone infiltration across India and steady growth in the disposable income of Indian families.
Around 4,450 EdTech start-ups are operating in the nation presently catering to various segments including K-12, vocational, and professional training/skilling and school/college educational operations. Schools, colleges, and other educational institutions have gone online because of the lockdown and COVID-19 concern, which resulted in the birth of numerous EdTech products and services. Though still in its infancy, there has been a tremendous shift in curriculum design and pedagogy. During the shutdown, traffic share for EdTech companies like Vedantu and Byju's (tutoring) and Unacademy (video classes) significantly increased. Physicswallah emerged as the victor in this digital age.
Physicswallah, the gamechanger of the ed-tech revolution
In 2017, newly-minted instructor Alakh Pandey and his coworker Pratik Maheshwari launched the Physicswallah YouTube channel. Exam prep candidates started to like their YouTube videos, which increased their views. Following this, Alakh Pandey continued to post lectures in this format on YouTube for three consecutive years. After that, a mobile app was developed because of the challenges faced by students studying for NEET and JEE. This YouTube channel has more than 100 lakh subscribers, and 10 million people have downloaded the app. Today, this ed-tech’s net worth has reached 1.1 billion. It is the 101st unicorn company in India with Westbridge and GSV Ventures as its investors.
The platform's mission to offer affordable, high-quality education to everyone is its main selling point. The annual batches offered by Physicswallah cost just 3000–4000 rupees, in contrast to the 1–1.5 lacs charged by large education technology companies like Unacademy, Vedantu, and Byjus. The largest obstacle for a student in India is to receive assistance and succeed in a particular field which has been difficult due to lack of money to fulfil the big pocket fees. PhysicsWallah understood these difficulties faced by the students and it hit the right buttons at the right moment. Due to its growing popularity, other industry titans were forced to accept the concept of affordable education.
With all these benefits and the rising need for affordable study materials, the edtech industry saw revenue increase to rupees 350 crores for FY 2022 from rupees 24 crores for FY 2021. Other platforms, including Unacademy and Byjus, suffered losses of over Rs. 1500 crore for the FY 2022 as a result of excessive marketing expenditures that were ultimately ineffective.
Another significant factor in Physicswallah's victory in this conflict was face value. Physicswallah had their founder Alakh Pandey, an idol for his students because of his relatable life story and struggles, who made an instant connection with his students when other ed-tech companies were busy bringing on board celebrities for the growth of their products.
Impact of excessive promotion
Due to the increase in competition over the last few years, edtech companies have started spending hefty amounts on their promotions. These companies tend to focus more on their promotional strategies which result in the neglect of the quality of education.
This can be seen from the promotion techniques used by Byjus. From becoming title sponsors of the Indian Premier League to roping in one of the highest-paid Indian actors, Shah Rukh Khan, Byjus never steps back when it comes to advertising. It has appointed football megastar Lionel Messi as the global brand ambassador of its social impact arm, Education For All. Rather than improving the most important aspect of the organization which is quality content, BYJU’S focused on aggressive selling.
Similar to BYJU's, even Unacademy uses A-list celebrities like MS Dhoni to advertise. Unacademy, for instance, made 398 crores in sales in FY 2022 but spent 414 crores on marketing and advertising. Byjus, which made 2381 crores in revenue, had to spend 1175 crores alone on marketing. In contrast, Physicswallah had no marketing budget and continued with its innovative plan for free education, relying on the popularity and goodwill of Aalakh Pandey to entice students to sign up for their courses.
Thus, it can be concluded that these startups have attracted a lot of new students during FY22 and broadened their offerings to include skill-based courses, upskilling courses, and more. However, the slowdown in funding and the cost-cutting measures taken by many of these startups, including layoffs, will reflect in their financial statements for FY23 and create a negative image for them.