ELearning Market Update (March 2009)

The latest research report from Ambient insight confirms what we have felt for some time, that the recession is a growth catalyst for the sales of learning technology products and services. The U.S. demand for learning technology products and services is estimated to be growing by a five-year compound annual growth rate (CAGR) of 16.3% and revenues reached $30 billion in 2008.

At Kineo we have seen first hand the way the recession has led to significant growth in the demand for our services. We were therefore very interested to read the latest research report from Ambient Insight report “The U.S. Market for Learning Technology Products and Services: 2008-2013 Forecast and Analysis” published on 26 March 2009. We review the key findings below.

Elearning growth

Ambient estimate that learning technology revenues reached $30 billion in 2008 in the US. The headline forecast is for demand for learning technology products and services in the US to achieve a five-year compound annual growth rate (CAGR) of 16.3%. Ambient argue that the market is favorable for learning technology suppliers, despite, or perhaps because of, the recession.

A move to more cost effective solutions

Sam S. Adkins, Ambient Insight's Chief Research Officer commented "In the current economic climate, buyers are eager to migrate to more cost-effective solutions. The current market offers significant revenue opportunities for suppliers, particularly those that offer second and third-generation learning products to buyers."

Reductions in corporate elearning budgets

Self-paced elearning, even though the most mature learning technology product, will generate the highest revenues throughout the forecast period. As of 2008, Self-paced elearning products accounted for 18% of all enterprise training expenditure. However, Ambient argue that those budgets are now targeted for reduction. Unlike the last recession, there are now several newer and cheaper learning technologies available to buyers. Enterprise buyers now have many more options available to them as they reduce both their classroom and Self-paced eLearning budgets.

Growth in SME elearning expenditure

Small and medium-sized enterprises (SME) have been slow adopters of self-paced elearning and the majority of their expenditures, if they buy training at all, still go to classroom products. In the current recession, Ambient argue these buyers are migrating away from classroom to a range of learning technologies but they are leapfrogging Self-paced elearning and migrating to other learning product types.

Migration from classroom and elearning to virtual classrooms

The primary beneficiaries of this current recessionary trend according to Ambient are the Collaborative-Social Network Learning suppliers. “This product type will generate the second highest product revenues during the forecast period as organizational buyers migrate from physical classrooms and Self-paced eLearning to virtual classrooms.”

Health and education remain strong

Recessions tend to impact training and education expenditures in some sectors more than others. Ambient argue that “while no industry is immune from a recession, there are verticals that tend to be “recession-resilient” such as education and healthcare.”

Innovative suppliers growing

Adkins noted that there are significant revenue opportunities and that the best suppliers “are innovating their way out of the recession” to offer newer and cheaper learning solutions. At Kineo we like to think we are at the forefront of these developments as we have been streamlining development processes, using new authoring technologies and offering open source solutions such as Moodle and DimDIm to deliver innovative solutions that offer real value to our clients.