We consider below what impact this acquisition may have on the UK elearning market. Futuremedia has announced it has reached an agreement to acquire EBC for £4.45m. What will this acquisition mean for the UK bespoke elearning market? Steve Rayson looks in his crystal ball.
Futuremedia had already made its ambitious intentions clear with a bid for Epic, arguably the UK's largest bespoke e-learning developer, during the summer of 2005. Thus its proposed acquisition of EBC will come as no surprise to many in the industry.
A new dominant bespoke player?
Futuremedia has made significant strides in recent years in the managed learning space with its focus on learning communities and managed staff benefits such as the Home Computing Initiative. It has not made such headway in the bespoke elearning market and its intentions to do this through an aquisition were made clear this summer when it made a bid for Epic. EBC will clearly give Futuremedia the significant bespoke elearning client base and production resource that it was looking for.
EBC brings with it a solid base of clients especially in the retail and public sectors. The companies appear to have a different core bespoke client base and hence the acquisition will give rise to a bespoke operation well in excess of EBC's declared revenues of just over £2m.
This does not though herald the arrival of a new big player in the bespoke elearning market. Futuremedia's bespoke operations are themselves relatively small and hence bringing together the bespoke revenues of both companies will still leave Futuremedia's bespoke revenues well below that of companies such as Epic and Tata.
A new big learning player?
What is more interesting is the fact that Futuremedia is adding to its other learning capabilities. It already has an established learning management platform used by clients such as Bupa and Royal Mail. It also has a strong focus on learning communities and a large client base through its HCI work. EBC gives Futuremedia real credibility as a large bespoke elearning production house. This in turn increases the company's ability to provide a complete managed learning service for clients. Thus this could mark a turning point in Futuremedia's ambitions as a major learning provider.
Further market consolidation?
2005 has seen a number of acquisitions and mergers in the UK bespoke market. Redtray acquired BlueU; Huveaux acquired Epic and Futuremedia is now acquiring EBC. It is therefore fair to ask if the bespoke market is going to undergo a period of substantial consolidation as is taking place in the Learning Management System market. I still do not believe this will happen. EBC and Epic were not acquired by other large bespoke developers. One was acquired by a publisher the other by a company with a much wider learning focus, particularly on managed learning. They were both acquired to provide production capability for their new owners. They were not merged with other large bespoke companies as part of a market consolidation. In some ways they might even lead to greater fragmentation with an increasing emphasis on product at Epic and on managed learning services at Futuremedia, leaving the bespoke market remaining a very competitive market.
In the short to medium term I believe the bespoke market will continue to characterised by a lot of relatively small companies competing with each other aggressively and reducing prices. This is especially so as we see more offshoring of content production, more efficient tools and cheaper technology (even free technology in the case of open source tools).
There is, however, the possibility that Indian and American companies will look again at gaining a foothold in the European market as part of their global strategies. Thus we may see some further acquisitions in 2006. It will be interesting to see what the new year brings.