Udemy: Taking Advantage of a New Normal
Udemy has undeniably been one of the few companies that directly benefitted from the unprecedented times we are living in. They managed to take advantage of new digital opportunities in the e-learning space by combining a winning business model with an increasing focus on new customer segments.
The e-learning market has been thriving for quite some time: in early 2020, it was estimated to continue to grow at a CAGR of 9,2% and reach a total size of around $320 billion in 2025. But that was before the world completely changed. 2020 has turned out to be a decisive year for online learning platforms, as a lot of countries implemented lockdown policies and consumers had to adapt to new ways to learn as a result.
Udemy is the largest global e-learning marketplace, founded in 2010, and now boasting over 40 million learners and 480 million course enrollments. The company even recently closed a $50 billion Series F round last November, less than 8 months after its Series E. In the same amount of time, the company valuation grew by more than 60% to reach $3.2B. Udemy has undeniably been one of the handful of companies that directly benefitted from the unprecedented times we are living in. The explanation is surprisingly simple: they managed to combine a winning business model with an increasing focus on new customer segments, which helped them take advantage of new digital opportunities in the e-learning space.
Why was Udemy a big winner during the pandemic?
The pandemic has redefined the rules of learning and teaching
The first, obvious reason is external. As lockdowns, shelters in place, and social distancing became the new normal around the world, people like students, young adults, and business professionals had to adapt to the idea that learning has to happen outside a classroom. Teachers are now on Zoom or Google Hangouts, blackboards are replaced by screen sharing, and raising a hand can be done with the click of a button. This was the case for people attending schools, but also for professionals regularly attending workshops at their workplace.
As a result, alternatives to online learning platforms became rare, which probably convinced people that it was worth a try. A simple search on Google trends shows how the phenomenon brutally accelerated in early March.
An all-time demand peak for new professional and personal skills
With daily commutes, restaurants, and leisure venues becoming a thing of the past, people also suddenly had more time. A survey showed for example that 24% of UK adults had taken on new learning opportunities during the lockdown. Udemy experienced a 425% increase in course enrollments from consumers, particularly in Spain, India, and Italy just after the shelter-in-place policies were announced. Interestingly, the strongest growth was seen in personal skills related to wellness (Pilates, Yoga) and music (Ukulele, Guitar), just before growth in technical (Tensor Flow, Chatbots) and business skills (financial trading). People are using the platform to deal with the anxiety of the current times and work on their skills to improve their competitiveness in the tough job market.
Udemy has taken advantage of these trends to better advertise the platform and created a resource center to provide free access to some of their content to support people through this time. A clever way to increase the customer base in the long-term.
An unprecedented increase in supply
Udemy’s business model allows almost anyone to upload their course and set their price for it, capturing 50% of the value the end-user pays. Because of relatively low barriers to becoming an instructor, Udemy was able to position itself as a new potential source of revenue for people with free time and knowledge to monetize, with the ability to reach a worldwide audience. Contrary to other e-learning platforms such as Skillshare, Udemy does not have a subscription model: users pay per course, which guarantees a fair revenue and more flexibility for the instructor, making it more appealing.
Udemy has therefore seen a 55% increase in course creation in 2020.
The winning corporate learning strategy
Udemy’s key to success lies probably in their recent focus on enterprise customers. A lot of companies were not equipped to help their employees grow while working remotely, and needed ready-to-use solutions to solve that problem. On top of already prestigious names such as Apple and Unilever, the company acquired customers such as United Air Force, Walt Disney or Toyota, and its corporate activity passed the $100 million annual recurring revenue milestone. In total, more than 7000 enterprise customers trust Udemy to develop the skills of their workforce, and enterprise consumption rose by 80% in 2020. The company also developed powerful integrations with existing platforms (such as workday or other learning management systems) to enhance the learning experience for employees around the world.
Contrary to the consumer version, Udemy for businesses is subscription-based (on a per-user-per-year basis), which is a good way to scale rapidly.
Udemy’s success has a lot to do with the unprecedented conditions that 2020 has imposed on us all, but thanks to an innovative positioning and focus on enterprise customers, there are a lot of reasons to believe that this success will outlive the pandemic. As companies and consumers browse through Udemy’s tremendous course catalog and the last skeptics realize that online learning is more convenient, chances are the platform’s success is here to last.
Global Online Education Market Worth $319+ Billion by 2025 – North America Anticipated to Provide the Highest Revenue Generating Opportunities, https://www.globenewswire.com/news-release/2020/04/16/2017102/0/en/Global-Online-Education-Market-Worth-319-Billion-by-2025-North-America-Anticipated-to-Provide-the-Highest-Revenue-Generating-Opportunities.html
Udemy for Business Surpasses $100 Million Annual Recurring Revenue Milestone, https://about.udemy.com/press-releases/udemy-for-business-surpasses-100-million-annual-recurring-revenue-milestone/
Online Education Steps Up: What the World is Learning (from Home), https://research.udemy.com/research_report/online-education-steps-up-what-the-world-is-learning-from-home/
A Record Year Amid a Pandemic: US Edtech Raises $2.2 Billion in 2020, https://www.edsurge.com/news/2021-01-13-a-record-year-amid-a-pandemic-us-edtech-raises-2-2-billion-in-2020
Student comments on Udemy: Taking Advantage of a New Normal
Very interesting. Indeed, Udemy seems very well positioned in the industry and prepared to deal with the pandemic impacts. A business model that allows anybody to be a student or a teacher, anywhere, is a powerful way to democratize education and has the potential of disrupting the entire industry.