COVID-19 Hits Small and Medium Academies Hard: "Edutech Market Grows from 4 Trillion in 2017 to 10 Trillion This Year"

Hana Financial Research Institute Report

[Asia Economy Reporter Kwon Haeyoung] While small and medium-sized academies have been hit hard by the novel coronavirus disease (COVID-19), it has been analyzed that Edutech companies providing non-face-to-face education services continue to experience stable growth.

According to the "Industry Impact Analysis Due to the Global COVID-19 Pandemic" released on the 12th by Hana Financial Management Research Institute, a survey by the Korea Private Education Research Council showed that among academies closed for more than two weeks due to COVID-19, 61.7% of respondents were affected (based on 984 academies with fewer than 300 students).

This was due to the government’s "social distancing" policy to prevent the spread of COVID-19, which included postponement of school openings and recommendations for academies and private tutoring centers to close. Although the closure rate has decreased since mid-March, the institute estimated that actual student attendance remains very low.

The institute pointed out that financial difficulties are occurring mainly among small and medium-sized academies. In particular, academies specializing in arts and physical education fields such as music, art, and physical education, where online classes are not feasible, are suffering more severe impacts with no clear solutions.

Researcher Kim Yujin of Hana Financial Management Research Institute analyzed, "In the case of academies, revenue drops to zero during closures, but due to high labor concentration and a high proportion of fixed costs in expenditures, financial damage is inevitable. Although the number of academies opting for non-face-to-face classes such as online lectures is increasing, student attrition may occur due to issues with technology and class quality, and the situation is especially serious for small academies without their own online content." She added, "From a mid- to long-term perspective, if the COVID-19 situation prolongs, causing a slowdown in the real economy and reducing household consumption capacity, it is highly likely that spending on arts and physical education within children’s education expenses will be further tightened."

On the other hand, interest in Edutech is increasing. The Edutech market, which has become more attractive as an alternative to COVID-19, is expected by the institute to expand from 4 trillion won in 2017 to 10 trillion won in 2020.

This content was produced with the assistance of AI translation services.