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Economics of Virtual Education: Assessment of the Level of Competition and Market Entry Strategy

Digitalization processes, external challenges and growing demands for the formation of new competencies have led to the fact that currently such a traditional sphere as education is undergoing a serious transformation both in terms of the teaching methods used and competitive strategies implemented by the subjects of the educational process. One of the most dynamically developing sectors is virtual education, It has grown over the past fifteen years from simple information sites to full-fledged virtual educational systems capable of offering customized educational products to a wide range of users. Despite the relative youth of the virtual education sector and the controversial identification of its borders, sufficient statistical and factual material has already been accumulated, which allows us to assess the level of competition and barriers to entry into this market. Identification of typical competitive entry strategies will allow both to trace the main trends in the development of this market and to assess their prospects in terms of the possibility of application by new players. The purpose of the work is to assess the level of competition in the virtual education market and identify characteristic strategies for entering this market. Based on the data of the EdTech rating and the “List of transactions in the field of virtual education for 2014–2016”, to assess competition and identify the main descriptive strategies. The level of competition was assessed based on the calculation of the Herfindahl – Hirschman Index and the calculation of the degree of market concentration. To assess the barrier of entry and the survival of startups, an analysis of the investment volumes for the projects that have survived at the moment was carried out. When grouping and describing entry strategies, monographic and historiographical methods were used, as well as an analysis of the volume of investments and the sectoral affiliation of companies. According to the results of the study, a conclusion was made about the high level of competition in this market and the average level of its concentration. A number of characteristic strategies for entering the market are identified, quantitative estimates of the volume of investments in their implementation are given. Read more...