Last week, the three of us (along with more than 350 of our university and industry colleagues) participated in the 2023 edX Global Forum. This was the first in-person Global Forum meeting since the for-profit 2U acquired the nonprofit edX for $800 million in November 2021.
Conversations at this latest edX Global Forum were shaped by three key themes:
- 2U and edX Together
University participants at the Global Forum included schools that have historically partnered with 2U, with edX and with both. Everyone at the forum continues to try to understand what a 2U-owned edX now means for existing and potential degree and nondegree online portfolio. The notion of an efficient learner-centric marketplace is compelling. But what does it look like in practice?
- Challenges for Online Education Programs
Online degree and nondegree programs are being met with challenges, as a combination of increased competition and higher digital marketing costs (as well as high inflation) impacts demand. Universities that currently partner with 2U/edX (or are considering doing so) are wondering what the shifting market and regulatory landscape will mean for the future university-company online program collaborations.
- Artificial Intelligence and Online Learning
AI was featured in almost every conversation around the future of online education. In some ways, the spike in chatter is reminiscent of the first wave of MOOCs. However, whereas MOOC mania met an audience that was split between whether it would forever change higher ed or do nothing, there seems to be a universal understanding that AI portends major changes to all our work. 2U spent considerable time detailing plans for integration of AI into their platforms and digital marketing efforts.
Beyond these three big themes, we offer 11 more general observations from the 2023 edX Global Forum.
- Lots of new degrees in the pipeline: 2U announced that they will launch roughly 80 degrees next year. That’s a lot. Approximately 95 percent of these will follow 2U’s new flex model, which gives schools options to select the services they want in a more tailored revenue share bundle. This volume should give plenty of opportunity to sharpen the model if 2U effectively engages in customer discovery with its university partners.
- Revenue share hangs on: There isn’t a uniform opinion among university partners about revenue share vs. fee for service. Everyone seems to be happy that 2U is offering optionality in the form of the fee-for-service alternative, but there are still questions about whether the pricing of this option will be compelling for universities who have not all invested in internal capacity in the same ways. Most (if not all) of the 80-some new degrees that 2U will be launching with universities will be structured with the new flex revenue share model.
- Pricing for online master’s degrees is going through a reset: The focus on degrees and the push to offer these master’s programs through “disruptive pricing” (sub-$30,000) is a big point of emphasis. Universities are trying to understand how large and permanent this shift is in normative pricing for degrees, what low-cost degrees mean for quality and how this pricing level impacts the ability of schools to cover expenses and derive any margins. Importantly, discussion around this topic mistakenly conflates price and cost with alarming regularity. We are also concerned that while the cost structure of OPMs is reasonably well understood, the corresponding cost structure of universities to support quality programs is both variable and not fully represented in the pricing discussion.
- The rise of the enterprise online market: One of the fastest growing parts of the market is represented by companies and other large employers who invest in courses and other offerings for their employees. This segment appears poised for growth and 2U emphasized additional focused investments in the enterprise channel. Not surprisingly, universities vary widely in terms of experience and comfort engaging in these channels. It is critical that companies like 2U, implementing marketplace strategies, continue to help each side of the market to better understand each other.
- “OPM” is a dirty word: Everyone is moving away from the OPM label, including 2U. The emphasis is on flexible partnerships and (some) increased university choice, with a mix of revenue sharing and fee-for-service options. Market sentiment and regulatory rumors no doubt are contributing to the movement away from this label. But it’s also just not a great label. Some will scoff at describing the actors in this marketplace as immaterial. We think it matters and look forward to engaging with colleagues across the ecosystem to help reframe the taxonomy of a sector that has changed wildly in the last decade.
- From online learning to digital transformation: If you don’t have a digital transformation strategy already, you need one. Online learning is one component of digital transformation, but the institutional organizational change efforts are much broader and deeper. Scaling content, curriculum and credentials is part of the story, but sustainable innovation in higher ed will be as much about people, policies, systems and infrastructure as it is about pilots and programs.
- Boot camp challenges: Learner searches looking for online boot camp programs are WAY down, while other product types are up in terms of learner search. This is part of a larger trend where the nondegree online market is shifting to lower-cost and shorter programs. We believe the average learner has become more discerning and can sniff out offerings that promise more than they deliver.
- Strong demand for online AI training and credentialing: Demand for AI content is challenging python, the long-time incumbent in the top search spot. There is a need for universities to develop AI-related programs and to be agile with curriculum cycles and learning options. We’ve long discussed the fact that content shelf-life varies by discipline and topic. This will be especially important to understand in the AI domain as universities consider approaches to the development and iteration of offerings.
- 2U is focusing on fully integrating and evolving the edX platform: 2U’s new chief product officer, Aaron McCullough, received considerable airtime throughout the event. Aaron’s role will focus on integrating product management, engineering and content strategy. 2U is not the only ed-tech company to realign teams over the last year. As these companies mature there is a predictable silo-busting journey that is required to more fully realize potential.
- Activating a platform strategy is hard: 2U presented some data in the sessions on the recent success of their platform strategy in driving demand for degree programs. There is considerable work to be done, however, in evolving the edX platform and in integrating the edX and 2U university relationships and content/marketing strategies.
- 2U has a full plate: The priorities that we heard at the edX Global Forum from 2U include growing degrees (especially lower-cost master’s), building out the enterprise channel, AI integration in platforms and marketing, expanding content, and evolving the edX platform.
We’d like to close with some genuine kudos for 2U. The company’s leadership listened to what university partners wanted from a convening such as the Global Forum and worked to design the convening to allow for time for unstructured conversations and information sharing.
On the theme of responsiveness and flexibility, the session dedicated to the current state of boot camps led to a number of contentious discussions. 2U could have moved on. Instead they modified the conference agenda in real time and added a new session on day two to embrace the discussion more fully. It would have been easy to shift attention to simpler topics. We respect the approach they took to give more space for challenging conversations.
We are particularly grateful to Andrew Hermalyn, 2U’s president of partnerships, for working closely with the members of the university advisory council (in which we participate) for working closely with that group to build a productive agenda and to design a collaborative working meeting for this group.