News analysis Education and the futures game


Last month, Futuresource produced a report on the education market prompted by news of NetDragon’s acquisition of Edmodo. Following on from the Chinese gaming giants purchase of Promethean and Jump- start, a new super-power is emerging in education technology.


April’s announcement of Net- Dragon Websoft’s agreement to acquire US-based Edmodo, Futuresource believes that the deal will likely present growth opportunities for NetDragon’s broader portfolio of education solutions. It could even have competitive ramifications for companies operating across the breadth of the education tech- nology sector.


By investing a further $137.5 million USD, Edmodo joins Promethean and Jumpstart in NetDragon’s stable of ed tech companies, completing the “triple


threat” Hardware


With Promethean, bought in 2015, NetDragon acquired an install base of more than one million classrooms across the globe which use Promethean interactive displays. Jumpstart, acquired in July 2017, pro- vides NetDragon with a portfo- lio of educational games, work- books, videos and apps. Now, Edmodo’s education network, with more than 90 million us- ers across 194 countries, is paving the way for a consolidat- ed offering that reflects what’s been happening in the enter- tainment space.


Author of the Futuresource re- port, Ben Davies says: “For the entertainment technology and ecommerce giants it all begins with the eyeballs. If you don’t have people engaging with your products and services, then they’ll be looking at somebody else’s instead. Get the eyeballs away from your competitors. Worry about the monetisation at a later date”.


Many of the major players in entertainment technology are now offering free tools and content to build out their user bases, converting them to pay- ing customers further down the line; preferably via regular sub- scription payments.


The freemium business mod- el is a little trickier to imple- ment in the education market where the ability to generate income via advertising is large- ly prohibited. As such, Edmodo has struggled to generate sus- tainable revenue streams and a definitive strategy to monetise its 90 million users remains unclear. The NetDragon acqui- sition will offer opportunities to do this by upselling a broader portfolio of solutions across the Edmodo user base.


Monetisation


In the world of social networks, where Facebook can generate billions through ads, the nature of Edmodo’s user base (around 90% are students in K-12 ed- ucation), as well as its sector and its position as a secure platform in which users can connect and share resources,


of hardware,


content and community plat- form.


makes advertising a difficult proposition. An alternative is to take the upsell route, which Edmodo has pushed with a basic free version that teaching staff can improve upon by paying for additional functionality. Then there are app stores and a mar- ketplace. All of these strategies have failed to generate signif- icant sustainable revenues for Edmodo.


All those millions of subscrib- ers could represent a potential data goldmine, but it’s a locked gate. Edmodo is a signatory to the Student Privacy Pledge, a legally enforceable statement by ed tech companies to safe- guard student privacy. In a world where the General Data Protection Regulation (GDPR) is about to come into force in the EU and the Facebook boss


micropayments, with revenue streams from publishers and associated tie-ins. The ability to link an in-class solution to a social network used at home will provide NetDragon access to the consumer market, which Futuresource research shows has increasing demand for ed- ucation focused entertainment content for children. NetDragon’s recent string of acquisitions provides the company with access to three key areas of the Edtech mar- ket. Here at Futuresource, our research shows that sales of interactive displays into the education market reached over 1.5 million units last year. Pro- methean is a key provider in the category, with a foothold in North American and Western European markets that are cru- cial to the global acceleration


to a staggering 32% by the end of H1 in 2017. User base


Acquisition of the Edmodo plat- form gives NetDragon a large freemium user base to market its paid for solutions. Converse- ly, the integration of premium content and features from its portfolio into the Edmodo plat- form could provide incentives for schools and districts to im- plement an enterprise version of the platform for institution wide use.


These opportunities are set against a backdrop of signif- icant upheaval in the school management platforms sector. This highly fragmented market is being transformed by a grow- ing number of freemium plat- forms, Edmodo, among them. Despite this, the $ value of the


get the full picture. The games division contributed a profit of ¥675 million Chinese Yuan ($107 million USD), whereas the education division suffered a loss of ¥423 million Chinese Yuan ($67 million USD). The figures show that it’s complete- ly plausible that NetDragon will use revenue from games to sup- port education until it can be self-sustaining.


So, what does the future hold for education and education technology? As the concepts of the flipped classroom and ac- tive learning find their feet, the way information is provided to students is changing. There’s more emphasis on how lesson content is communicated, how students interact with it, under- stand it and come up with their own solutions. K-12 students have grown up with the inter-


By investing a further $137.5 mil- lion USD, Edmodo joins Promet- hean and Jumpstart in NetDrag- on’s stable of ed tech companies.


all-in-one mobile VR hardware kits for classrooms through its channel partners and our Fu- turesource forecasts show that hundreds of thousands of these low-end VR devices will be in use in schools by 2021. Lead- ing educational publisher, Pear- son is also currently developing over 200 VR experiences for in- corporation into its robust range of higher education and K-12 courseware and has partnered with Microsoft to offer Mixed Reality solutions. Apple is also investing in the segment with AR experiences for education taking center stage at its March 2018 press conference.


Immersive technologies


Due to the dynamic, collabora- tive environment that they’ve grown up in, today’s students are often uncomfortable with the more traditional methods of learning. To appeal to the children of today and tomorrow, forward-looking companies like NetDragon are bringing visu- al communications, dialogue and active classroom,


learning into the transporting stu- NetDragon Websoft – charting the way to the future?


Alistair Hayward, Head of UKI & ANZ at Promethean said: “As part of the larger NetDragon Websoft group; Promethean can offer our channel partners, and end users, the assurances that the company will be here in the long term.”


is being questioned on the ex- ploitation


of Synergies


Introducing Edmodo into Net- Dragon’s brace of ed tech com- panies creates a synergetic whole. The broader portfolio of


interactive displays, gam-


ing content and a social me- dia platform starts to present opportunities for revenue. For example, the student manage- ment features of Edmodo could be used to complement the collaborative functionality of Promethean’s interactive dis- plays. It could also be linked to Jumpstart’s games, which fo- cus on teaching specific skills that are integral to the curric- ulum.


Think Facebook and its for- ay into gaming content and


P14 AV News May 2018 users’


data, leveraging student data is a risky business.


personal


of ed tech adoption. Accord- ing to the company, more than 50,000 schools in 154 coun- tries are using its products. Additional resource from Net- Dragon enables Promethean to grow both its reach and market share, Wrting for AV News last year, Alistair Hayward, Head of UKI & ANZ at Promethean said: “As part of the larger NetDrag- on Websoft group; Promethean can offer our channel partners, and end users, the assurances that the company will be here in the long term. Whether that’s to fulfil any warranties, support technology growth or invest in future product innovation. Moreover, with the summer in- stallation now upon us, it will only be a matter of weeks be- fore we see which vendors come out on top.”


The immediate effect was to see Promethean’s iFPD market share leap from 18% in 2016


market will continue to rise with premium features like security, data management and platform interoperability creating oppor- tunities for premium feature upsell. Futuresource projects revenues of $1.7 billion in the US K-12 platforms and tools market this year, with revenues expected to increase annually through to 2021.


Any seismic shift won’t hap- pen overnight. For NetDragon to align its brands and define a sustainable strategy it’s going to take both time and resource, but it does have the financial reserves to play the long game. In 2017, according to its finan- cial reporting, education earned the company revenues of ¥2.1 billion Chinese Yuan ($333 million USD), equating to over half of its total revenues, the remainder coming from games. It’s only when we drill into the profits of each division that we


net, they expect a multi-layered world where communication is instantaneous. They expect to be placed at the heart of in- formation and entertainment; communicating instead of ab- sorbing, interacting with data and shaping their surroundings. NetDragon has a handle on the new generation of


digital


natives, and just a matter of months ago opened a subsidi- ary that will explore the use of augmented reality and virtual reality in the education market. It’s been running VR trials in schools since 2016, but this new subsidiary, Elernity Thai- land, focuses on integrating data analytics with VR and AR to create a fully-immersive edu- cational experience.


Meanwhile, Google has part- nered with hundreds of content creators, developing over 600 free to access learning-focused virtual tours. Google resells


dents to different places, times and planets, allowing them to squeeze the maximum amount of value out of learning expe- rience. Watch out for virtual school trips, digital lab experi- ments, the exploration of anat- omy to enrich the sciences and the transportation of students to restaurants and markets in foreign lands to provide more authentic language learning ex- periences.


Although the future of immer- sive technologies in education is yet to be determined, the rap- id investment from prominent players against the backdrop of a tech-savvy, digitally-advanced new generation is enough to create a lucrative spark. Whichever way it plays out,


it’s still all about getting those eyeballs on your product, and the acquisition of Edmodo has afforded NetDragon an enviable position within the future edu- cation landscape.


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