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I’m trying to figure out the size of the learning management system (LMS) market.

The problem with numbers related to educational technology is that you just can’t trust them. 

Do a Google search for the size of the LMS market and you get some really big numbers, and wide discrepancies in the estimates.

The first result that comes up in Google is from Zion Market Research. Their estimate is that the global LMS market is valued at $5.19 billion in 2016, and expected to reach $19 billion by 2022.

According to Statista, the LMS market in 2016 was valued at $3.21 billion. CNBC claims that the learning management system market is worth $5.2 billion today, and will grow to $16 billion in four years.  

Can these numbers be right?

An alternative approach might be to estimate the size of the LMS market by looking at revenues and market share of a company that we know. 

Fortunately, Instructure (the company behind Canvas) went public in 2015. So we have some data.

The latest numbers that I’ve seen indicate that Instructure (Canvas) has about a 20 percent market share. In 2016, Instructure’s revenues were about $111 million. (The amount of money the company took in).  

If we assume that the cost of Canvas is about average for LMS companies, we can get an estimate of the total market size by multiplying Instructure’s revenues by five. This gives us an estimate for the total size of the LMS market $555 million.

Revenues for Instructure grew by 51 percent between 2016 and 2017.  Let’s say that we used that figure to assume Instructure will see similar growth in 2017, and revenues will jump to $167 million.  Doing that same calculation, assuming that Instructure’s market share stays around 20 percent, yields an estimate of the LMS market size $832 million.

What explains the discrepancy of this LMS market size estimate (between $555 and $832 million), and those from the market research companies and the press of between $3.2 and $5.2 billion?

Are Instructure’s revenues particularly low?  According to the company’s Annual Report, they have backlog & deferred revenues (based on non-cancellable contracts) of $289 million in 2016.   If we add existing to future revenues together, we get $400 million - with puts the total potential size of the LMS market at $2 billion.  Still way below $3-$5 billion estimates of the LMS market, but closer.

The point is that we often read about huge numbers in the edtech world. 

A Google search about the global educational technology market yields an estimate that worldwide spending on e-learning will reach $325 billion by 2025.    A Business Wire report puts the global higher education technology market at $29 billion.

Until I really understand where all these estimates about the edtech and LMS market come from, I plan to be skeptical about any numbers related to the edtech industry.

The edtech market is so overfilled with hype that any talk about market share and future market size must be critically examined.

Can you point us to some current estimates of the current LMS and edtech market size? 

How do you make sense of the economics of edtech?

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