Education is roughly a $6.5 trillion market. Though only less than 4% is digitized, holding an untapped potential for EdTech.
The EdTech market is continuously growing. In 2021, the global education technology market size was valued at $183.4 billion. By 2026, it is expected to register an incremental growth of $410.2 billion at a CAGR of 16.0%. Also, the global EdTech expenditure is going to surge to $404 billion by 2025, meaning more businesses, governments, and customers will be willing to invest in learning and upskilling using the latest technology. Thus, the high demand for high-quality EdTech products will be put, opening new opportunities both for startups and established companies.
The market is changing, too. Evolving technology and changing student needs are the driving forces that inspire tectonic changes in the EdTech market. That is why studying the industry and learning the leading trends is essential before you make decisions about the next move.
So, what technological trends will lead the educational sector in 2023 and satisfy the learners’ demand for a more dynamic environment? We’ve brought them together in this article.
What Was Happening in the EdTech Market in 2022?
The EdTech industry has seen its ups and downs in 2022.
Fallen wages and growing inflation across Europe and beyond shattered EdTech among other industries. These conditions were not conducive to inducing confidence in investors. As a result, global venture capital (VC) investment slowed down. For the first time since 2014, there was a dramatic year-over-year funding decline to $10 billion in 2022 compared to $20.8 billion in 2021—by half.
The USA dominated EdTech VC investment, though the country had to slash funding to $3.9 billion. Europe held stronger financing patterns investing $2 billion. India seemed to be putting more effort into the development of EdTech funding $3.5 billion within 6 months. The steepest drop was tracked in China—$5 million, which was the result of new regulations.
Despite challenges, many EdTech companies not only managed to survive but also improved their positions.
Nearly 20 investment companies announced that they would focus on the EdTech industry with their new fund rounds, Sequoia Capital, Owl Ventures, and Agility Ventures were among them. So, even though the segment looked underfunded, there was a promise for a brighter future and more funding flows.
ByJu’s, Yuanfudao, and Zuoyebang were recognized to have the highest value among other EdTech unicorns. Their common capital was estimated at $46 billion, while the rest 7 unicorns held a value of $26.85 billion altogether. So, domain leaders strengthened their positions making it harder for new companies to find their place under the sun and attract new funding flows.
What else did 2022 bring to the EdTech industry? Let’s take a quick look:
- The value of public and private EdTech companies has reached $375 billion.
- Six new EdTech unicorns emerged on the market in 2022 like Paper ($1.8 billion value), Multiverse ($1.7 billion value), Domestika ($1.3 billion value), and ClassDojo ($1.25 billion value).
- The main EdTech market players that shaped the market in 2022 were the following: 2U Inc, BoxLight, Byju’s, Blackboard, Udemy, Coursera, Chegg, Duolingo, Udacity, and Unacademy.
- China’s prominent EdTech players Udacity, Coursera, and edX lost their attractiveness in front of investors due to the country’s regulatory headwinds. That gave rise to the interest in India’s EdTech market.
- The switch in the EdTech paradigm as to what consumers really want brought the first seeds in 2022. In the survey, McKinsey reveals that EdTech students seek value-added services (personalized mentoring, assistance during the job search process) and a sense of community. So, some companies started taking a holistic user experience considering the new demand. For instance, upGrad hired recruiting and staffing agents to help their learners advance in their careers. These are the changes many EdTech companies are yet to embrace in the upcoming years.
How Fast Is EdTech Growing?
Despite the recent setbacks and slowdowns, the EdTech industry is just taking a breath before a powerful re-boost. Based on the forecast provided by Reporter Link, the global education technology market size will grow from $254.80 billion (in 2021) to $605.40 billion by 2027. And this is an absolute growth of more than 130%. The CAGR will also be up by 15.52% during these years.
Let’s look at EdTech growth from a different angle. To be more precise, the quantity of EdTech unicorns. As of July 2020, there were 19 of them. At the beginning of 2023, their number nearly doubled making 28 EdTech unicorn companies worldwide. So, the competition is getting more fierce with every upcoming year. At the same time, the market brims with a myriad of mature product offerings that calls for new players to be more forward-looking to be able to compete.
What Are the Education Technology Trends for 2023?
What trends will drive the EdTech market in 2023? Here are 5 trends we project to be shaping EdTech that you may want to consider as you plan your next move.
In 2023, big data will continue paving its way into the EdTech industry. EdTech companies will use big data analytics to personalize the learning experience for students and create innovative approaches toward teaching.
Big data-driven platforms that let educators create personalized learning experiences will be in demand in 2023. Udemy, an education technology company, is an inspiring example of big data use for tracking course engagement. The instructors can immediately see the number of students who have opened the lecture, how many minutes they spent watching the lecture, and how many dropped watching the lecture within 15 seconds. Then, teachers can make the educational content more relevant for future courses.
Also, the EdTech solutions that enable educational institutions to manage the educational workflow will stay on top of the market demand this year. As an example, let’s refer to Civitas Learning, a student success intelligence platform that provides teachers with real-time data for supporting the student lifecycle and achieving equitable outcomes. It gathers data across the university or institution to help conduct career planning, measure efficacy, or support students in less successful areas.
Virtual and Augmented Reality
The adoption of virtual and augmented reality in EdTech has been not as fast compared to other industries. Nevertheless, these technologies have seen increasing interest from enterprises striving to add them to their EdTech tech stack recently. Just to compare, the global market of AR in education was estimated at $1.5 billion in 2020. By the end of 2023, its value will increase to $5.3 billion. The market is projected to see whopping growth by 2031—$53 billion according to the industry analysis carried out by Fact.MR. As the market grows, it stimulates the emergence of innovative education applications that facilitate training and mirror real-like experiences.
Mobile-based AR and VR solutions will be leading the industry in 2023. Such as Google Expeditions, a free mobile app, lets students take a trip to Mars, dive under the Sea, or look inside the human body with the use of virtual reality.
Another way of using virtual reality for educational purposes that are gaining momentum in 2023 is the ability to create and then embed a 3D model into the VR environment. This trend has been successfully implemented in CoSpaces EDU. The platform lets learners create 3D objects and insert them into a 360-degree environment.
The adult EdTech sector is quickly evolving, too. The corporate e-learning market was valued at $22.5 billion in 2021. By 2028, it is going to reach $44.6 billion. Along with other technologies, VR and AR will be there to help organizations implement mixed reality into their training programs in 2023.
Gamification is a great way to make learning more engaging across different industries, including FinTech. In EdTech, this learning and teaching approach is easy to trace, too.
In 2023, other technologies like artificial intelligence (AI), machine learning, big data, and IoT will accelerate the adoption of gamification in the EdTech sector. The industry will be also gearing up for using the metaverse, which is already gaining momentum. For example, Minecraft Education Edition is an effective tool for engaging students to explore real-world issues in a digital world. In cooperation with Polygon, Edverse created an educational metaverse for institutions and individuals. The implementation of learn-to-earn with the use of metaverse and crypto is going to be the next big move in gamification.
According to Verified Market Research, AI in the education market size will grow from $1.10 billion (in 2021) to $21.52 billion by 2028. Also, Microsoft’s report proves a universal acceptance of AI among educators. 99.4% of respondents said AI would give their institution a competitive advantage within the next years, while 15% think of the new education technology as a game changer. Undoubtedly, these findings pose new opportunities in the EdTech market for new players and established companies that will have a huge pool of consumers to appeal to.
Many EdTech startups use AI in their products. For instance, Elsa helps English learners hone their speaking. The AI-powered online tutor provides instant feedback on the student’s pronunciation. With Century-Tech, learners experience a high level of personalization as AI algorithms present the right level of material at the right time and fill knowledge gaps.
Face recognition technology is going to be in the scope of interest for many EdTech companies in 2023. In a post-pandemic world, many startups may want to integrate Emotion AI into their platforms.
The potential of using AI-powered robots for educational purposes is also considered. While they were not very common in the education sector in previous years, 2023 may be the year when more students will meet robots in the classroom.
Mobile learning is becoming increasingly ubiquitous. The mobile learning market size is going to reach $155 billion by 2026 as per the report from the Business Mobile Company.
Emerging interactive technologies such as augmented reality, virtual reality, and artificial intelligence are going to play a crucial role in shaping the mobile learning market in 2023. To illustrate how advanced technologies work for mobile learning, let’s look at Hatch Kids, a platform for teaching coding. It offers students to build AR and 3D games, and interactive VR environments from a smartphone.
Chatbots are increasingly becoming a part of education, shaping the demand for these solutions in mobile learning. For example, Nitin Ramrakhyani, Product Vice President at Novakid, claims that the platform’s development is currently centered around AI and chatbots as a response to the increasing demand for individual learning.
What Is the Future of Education Technology?
In the near future, the EdTech sector will continue to grow. HolonIQ projects that the use of technology will double in the nearest future. This will open up new opportunity pools and let entrepreneurs make moves into new verticals of the EdTech industry easier than ever.
By 2025, the global expenditure on EdTech is going to boost significantly in several key segments. In particular, the spending on augmented and virtual reality will reach $12.6 billion. Companies will be willing to invest $6.1 billion in the adoption of AI-powered EdTech solutions. Robotics and blockchain are going to be coveted technology for educational purposes as well. Therefore, these are the industries EdTech startups may want to tap into by 2025.
Make Technology Work on You in Your EdTech Product
Would you like to keep up with the trends and extend the capabilities of your EdTech platform? Are you determined to enter the market with a fresh product that pushes the boundaries with cutting-edge technology?
An experienced 8allocate team is here to help you, no matter what your tech needs are. Just get in touch with us, and we’ll arrange a call to discuss how our expertise will help you win the place under the sun in a saturated EdTech market.