[Education Industry in the AI Era] Crisis Triggered by Late Edutech Transition... Seeking Reversal in Adult and Senior Markets
by Choi Donghyeon
Published 25 Oct.2023 07:00(KST)
Daekyo Reports Operating Loss for 3 Consecutive Years
Offline-Centered Business Structure Hit Hard by COVID-19
Launched Senior Brand 'Daekyo NewEup' Last Year
Daekyo, which started its education business in 1976 under the name Korea Public Document Mathematics Research Association, developed a one-on-one home tutoring system and first introduced the concept of workbooks domestically in 1991. 'Noonnoppi' is a representative example. Thanks to high educational enthusiasm, Daekyo's sales exceeded 560 billion KRW in 1999 without major damage even during the IMF financial crisis. Growth continued during the 2008 global financial crisis, and sales increased to 930 billion KRW by 2011. At that time, the education industry did not doubt that Daekyo would comfortably join the '1 trillion KRW club' in sales, following Kyowon as the second company to do so.
The steady growth over more than 20 years ended there. As the school-age population declined, and IT devices such as smartphones and tablets became widespread, with internet and video learning gaining popularity for non-face-to-face education, cracks appeared in the traditional workbook market centered on home visits. The term 'Edutech' was coined during this period. Many education companies attempted to transition to an edutech system, but Daekyo only watched from a distance and did not conform to the changes. This was because it had developed its offline-centered education business on a large scale.
When Daekyo's operating profit, which reached 61.1 billion KRW in 2011, was halved to 31.6 billion KRW the following year, Daekyo focused on downsizing rather than reckless new business expansion. It restructured underperforming affiliates by merging Daekyo Publishing and the foreign language education company Daekyo EOL. From the 2010s, Kang Hojun, then head of overseas business strategy and eldest son of Daekyo Chairman Kang Youngjoong, actively pursued overseas business to seek a turnaround, but results were poor. As losses at overseas subsidiaries snowballed, Daekyo liquidated its China subsidiary in 2018, Vietnam subsidiary in 2019, and UK subsidiary in 2020 consecutively. The number of Daekyo's overseas subsidiaries decreased from 11 in 2017 to 7 as of last year.
Slower digital transformation compared to competitors and reckless overseas business expansion brought a major crisis as the COVID-19 pandemic began. While many competitors attracted subscribers by launching various edutech contents amid the non-face-to-face education boom, Daekyo failed to respond properly. Unable to operate its approximately 1,000 offline study rooms nationwide effectively, Daekyo recorded its first operating loss of 28 billion KRW in 2020 since its founding. The deficit widened to 50 billion KRW last year. In the first half of this year, it posted an operating loss of 19.4 billion KRW.
Daekyo's representative learning material brand 'Noonnoppi'. (Photo by Daekyo Noonnoppi website)
원본보기 아이콘Daekyo was not completely hands-off with edutech. In 2015, it launched 'Summit,' a smart education brand limited to math subjects. In 2018, it acquired the AI math education platform company 'Nori' for 28.4 billion KRW. Using this company's technology, it integrated it into Summit to introduce AI learning services such as 'Summit Speed Math' and 'Summit Score Math.' In March 2021, under CEO Kang Hojun's leadership, it launched the AI smart learning service 'Summit Step Korean and English,' and in December of the same year, it released 'Macadamia All-in-One,' an AI learning service covering all elementary school subjects, gradually expanding edutech service subjects and targets.
Daekyo is expanding its education targets beyond elementary, middle, and high school students to include infants and working adults. As part of this, it launched the adult language test platform 'Vanvo' in 2020. This service helps adults systematically prepare for foreign language proficiency tests in English, Japanese, Chinese, and more. On the 13th, it released 'Noonnoppi-e Ddak Matneun English,' a workbook specialized in beginner-level English conversation for adults.
It is also focusing on the senior business. With South Korea approaching a super-aged society by 2025 beyond aging, Daekyo's strategy is to discover new revenue sources. In January last year, Daekyo launched the senior total care brand 'Daekyo NewEve.' Daekyo NewEve provides various services covering the entire life of the elderly population, including day care centers, home care under long-term care insurance services, operation of caregiver training centers, fostering and dispatching professional instructors, and development of cognitive enhancement content. A Daekyo official said, "The first Daekyo NewEve Data Care Center, which opened this year, exceeded its capacity within a month, and inquiries about admission continue steadily," adding, "We will continuously develop proprietary content specialized for seniors through Daekyo NewEve and build comprehensive services in the silver industry, including personalized care and standardized manpower services."
Senior cognitive enhancement content course provided by Daekyo Group's senior business brand 'Daekyo Newif'. (Photo by Daekyo Newif website)
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