Changes ahead for the online higher ed learning market

Decreased higher ed market share signals shift in online program management

As more colleges and universities add online courses to their catalogs, the market share for online program managers (OPM) has begun feeling the effect.

At the end of July, 2U, an OPM, issued its latest report on earnings, which were well below expectations. The announcement led to an almost immediate 25% drop in the company’s stock price, although it soon rebounded. It was enough for CEO and co-founder Christopher “Chip” Paucek to announce a change of course, recognizing that the online education market is in transition. As part of 2U’s strategy, he noted plans to reduce new graduate program starts by at least half over the next few years and lower enrollment expectations. He said the change was the result of seeing what was ahead and that other OPM vendors would face similar challenges.

OPM market players

About 1,460 higher ed institutions serve some students taking only online classes, and 525 of those schools partner with OPMs to provide them, according to Tyton Partners, an investment banking and strategy consultancy. In addition to 2U, major OPMs include Blackboard, Online Education Services, Wiley Education Services, iDesignEDU, Pearson and Six Red Marbles. OPM services may include market research, course design, student recruitment and retention programs, and platform management.

With more than 60 competing vendors, market turmoil is to be expected. Another frustration for providers: More universities want to add online courses, but not at the cost or scale provided by most OPMs, so they are developing their own limited-scope platforms.

What the change means

As online learning continues to grow, the $3 billion-plus global OPM market is expected to surpass $7 billion by 2025. But to achieve that, and increase the number of higher ed clients, analysts predict that more vendors will switch to offering unbundled, fee-for-service models. As the OPM market matures, providers will expand beyond higher ed and serve corporate training and coaching programs and offer corporate recruitment, retention and career services.

Call for transparency

Meanwhile, at press time, 2U announced a new “Framework for Transparency,” calling on other OPM providers to follow. As a response to critics who claim that OPMs affect access to higher ed, the framework will offer students, colleges and policymakers data on outcomes, quality, institutional independence and more. Analysts say the move is an attempt to avert proposed federal regulatory changes by showing that the OPM industry can regulate itself. 

4 paths forward

How might the OPM market shake out in the coming years? Industry analysts from HolonIQ identified four emerging trends that will change the market’s direction in the next decade:

  1. The OPM sector matures, develops as an industry standard and spawns professional bodies. A few giants dominate the market, consolidating a long tail of smaller subscale operators. Eventually, global publishers and technology companies acquire OPMs, offering a deeper and broader suite of services to universities.
  2. University networks form to develop centralized public alternatives to OPM services. Drawing on existing university or disciplinary alliances and networks (e.g., Ivy League, Asian Universities Alliance, Universitas 21, The Russell Group of Universities), universities team up to build their own specialist “network-insource” services. 
  3. The OPM market remains highly competitive, with many providers delivering mostly fee-for-service and increasingly commoditized offerings. Universities maintain control over the value chain and key activities, resist bundled options, and partner with many providers offering specialty services.
  4. Universities develop their own in-house OPM services and hire staff from OPM providers. The upfront capital required is rerouted from new building works as online income continues to grow. OPM market growth slows as skills transfer happens across the sector.


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