In the opinion of Analysys, the reasons of the decline of China’s Internet education market in 2015 Q4 include:
First, at the beginning of Q4, affected by the downturn of the whole capital market environment, the capital began to tighten the investment strategy, although the number of Internet education venture capital project was basically stable, the number of Round B and C financing projects significantly were reduced, which was mainly concentrated in Round A and angel investment stage, leading to the decrease of total investment of Internet education market. The financing of a number of educational project was blocked, after experiencing the winter capital, some online education enterprise began to prepare the transition, especially the development of tutor O2O platforms encountered a bottleneck after in 2, 3 quarter popular in the creation of at the same time, after rapid financing, subsidy war, scalping and a series of events while creating the Internet Education outlet, the financing has become more and more difficult. On September 25, 2015, the tutor O2O platform "Laoshilaile" stopped the operation, several other educational O2O platforms were also questioned and the market was not optimistic about the situation, the education O2O returned to the rational state after being heated up, the transformation is imminent. In the opinion of Analysys, the Internet education is different from the e-commerce and taxi software, a simple transaction matching can’t meet the real needs of the users, the Internet in Internet Plus education is just the means, education is its essence. Only seizing the users’ pain points can improve the user's learning efficiency, only the education enterprises that can enhance the user's ability to learn the can be recognized by users.
Secondly, influenced by the particularity of China’s education Internet market, in the summer vacation period in August and September, namely the Q3, the Internet Education welcomed a small peak, the students have relatively more time and effort to learn, so the revenue in Q4 decreased slightly compared with Q3. But, it is worth noting that in Q4, some online education enterprises tried to use the opportunity of Double 12 to promote the curriculum and a good response was achieved, class.hujiang.com announced the "12.12 Learning Party" activity, the total revenue reached RMB 44.21 million, which was six times of the same period last year. Also under the influence of haze weather in December, Beijing Education Commission issued the task of “suspension of class and no-suspension of learning”, which required the teachers to guide the students to use the network platform and the digital resources to carry out learning activities at home, which also promoted the development of the online education, during this period, koolearn.com, “xueersi.com” under Tomorrow Advancing Life and other online education companies launched a free online courses for students to learn; some middle school teachers in Beijing used network platform for students teaching, homework arrangement and online answering. In the opinion of Analysys, it’s expected that the revenue size of China’s Internet education market will rebound in 2016 Q1.
In the opinion of Analysys, the China’s Internet education market in 2015 Q4 showed the following characteristics:
1. Coexistence of opportunities and challenges, the Internet education enterprises surviving from the winter are more competitive
The winter capital just means that the capital will be more rational to the investment, the Internet education, as a sunrise industry, has received attention and investment of capital. In 2015 Q4, the financing, mergers and acquisitions in the event field of Internet education still can be seen: in October 28, class.hujiang.com announced the completion of D round of RMB 1 billion of financing; in November 12, the preschool interactive platform, Zhihuishu, obtained RMB 100 million of B round financing; in November 19, Uniquedu Education announced the completion of 300 million RMB of financing; in December 18, Juesheng.com announced the completion of C round of financing of RMB 200 million. In the opinion of Analysys, the education industry is an industry with relatively slow development, it generally require a minimum of 3-5 years for a project from the beginning to the progressive development, to profitability, although there are now many companies have not yet made profits. However, after a few years when the whole Internet education market environment become increasingly mature and the user acceptance degree increases, more Internet education enterprises will obtain profits and development.
2. China's Internet education market has a trend towards the development of the mobile terminal, mobile APP gradually becomes the mainstream model
With the popularity of smart mobile devices and the vigorous development of 4G networks and wireless WiFi, combined with the Internet and mobile devices, the mobile applications that provide education related information for users and enterprises of quickly developed. Education APPs mostly have advantages of flexible operation and strong interactivity, which are more and more favored by users. Some entrepreneurial enterprises aimed at mobile terminal and launched a series of education related online education app products, children's early education APP (such as with xiaobanlong.youban.com, beva.com), question bank APPs (such as yuanouti.com, yuantiku.com, xueba100.com), foreign language learning APPs (baicizhan.com, Liulishuo, Zhangzhong English) which have been favored by the users with the novelty and usefulness, but because of the severe product homogenization, the competition is fierce.
3. The penetration scope of China's Internet education is wider, the market gradually expanded to the third and fourth tier cities
One of the important significances of Internet education is to solve the problem of uneven distribution of educational resources to a certain extent, so that more students can have more quality education resources. The students in the third and fourth tier cities are lack of quality education resources, so the demand is stronger. At present, the development of mobile Internet has reduced the threshold for users to use the Internet to study, and the promotion of Internet education has been supported by the national government and the education sector. Some of the online education companies that have good development in the first and second tier cities aimed at the third and fourth tier cities and even the vast majority of rural areas to expand their business, expecting to get more space and more opportunities for development.
Overall, affected by the overall downturn of the capital market in 2015 Q4, the revenue size of Internet education market declined slightly, but it does not hinder the overall booming trend of the Internet education market.
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