Goldman Sachs, in a note this week, via India Dispatch: There are various reasons that explains this: (i) A large part of the global education spend goes towards formal education (schools, colleges and universities), which are typically either run by governments or are not-for-profit institutions;
(ii) It is difficult to replicate education quality at scale in our view, since most teachers would have a different pedagogy, and thus standardization is harder to achieve vs that in other internet categories;
(iii) Education is fragmented - it includes various fields (schools, undergrad courses, medicine, engg, management, etc.), each with their own curriculum, and the same being vastly different across countries globally; this makes scalability difficult beyond a few certain specializations and regions.
Additionally, we believe the ability for online education to capture a sizable value share of supplemental education is limited since the perceived value of offline, including that from community, in-person engagement and doubt solving, rigour, etc., is typically higher.
However, we note that before China's double reduction policy in 2021, TAL and EDU had market caps of up to US$50 bn; these companies were mostly domestic focused and on the K-12 tutoring segment, which has large volumes. Similarly in India, Byju's reached a peak valuation of US$20 bn+ (link; again, focused on K-12), before issues around governance etc. impacted the business.
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