Why does ed-tech click in India while most other subscription-based businesses don't?

India is a tough market for subscription-based business models - on internet and otherwise. Subscription means prepaid commitment to a particular quality and cost for a fixed time. In a country ready to port carriers on the drop of a hat, such forced loyalty (especially on content available online) seems unlikely, isn't it! Especially, when internet gives ample opportunities for infidelity based on both cost and quality.

 

Now fathom this,

- Byju's had 4.7 million paid subscribers as of Oct '20. Each subscription on an average costs around Rs. 14,500

- Unacademy had 350,000 by Sep '20, almost four times of what it had in Feb.

 

On the other side,

- Spotify has been trying to lure the Indian audience with sachet sized - Rs. 7 and Rs. 25 subscription offerings

- Netflix India had pumped in all its financial might to build its India business, but had to resort to Rs. 199 mobile only plan to get people started

- Disney Hotstar with around 1.8 million subscribers, leads the pack - but not without spending Rs. 16,347 Cr on IPL rights

 

Such has been the cost of acquisition for subscription-based models with so little loyalty, that most businesses have found it difficult to have a long-term sustainable business model.

 

Now, coming to the question - why are people ready to pay almost 15,000 and renew at 86% while being on the fence for a 999/annum plan for an OTT platform.

 

Apart from the obvious utility, the following psychological factors end up making the users pay:


- Peer pressure: External coaching in India has as much been about 'our child being left behind' as it has been about her learning. The same is felt by both the parent and the child. I distinctly remember a chat with an ex-boss who told me that while his daughter is a decent student who does learn a lot from YouTube videos, is worried that she'll be left behind as most of her classmates have already subscribed to one ed-tech startup or the other.

- Uncertainty: We live in a VUCA world where the pace with which current education systems are becoming obsolete are for there for most to see and many to experience. Parents want to go the extra mile to ensure that their child knows that latest language, at the youngest age possible.

- Need vs Want: Most internet subscriptions, be it a e-newspaper or an OTT platform would remain 'wants' of the burgeoning middle class for years to come while ed-tech has slowly but surely positioned itself as a need for any student who wants success in life and for any parent who does not want to live in the guilt of not doing enough for her child.

 

Covid led disruption has, for obvious reasons, expedited the change.

 

Coaching institutes in India, for long, have made students better at solving questions rather than enhancing their ability to learn. Would online tutoring change that is the million dollar question.

 

#edtech #elearning #investmentideas #investment

 

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