Educational Service Industry in Japan: Key Research Findings 2020
Yano Research Institute (the President, Takashi Mizukoshi) carried out a survey on the domestic educational service industry (total of major fifteen service categories) and found out the trend by service category, the trend of market players, and the future outlook.
The total educational service industry (total of major 15 service categories) in FY2019 achieved 2,774,700 million yen, a rise by 0.3% from the previous fiscal year. Among the 15 categories, those educational services for students and pre-school children had managed to go through gradual expansion, supported by steadfast demand for educational services, despite diminishing young population causing decreasing demand. However, FY2019 saw outspread of COVID-19 infections at the fiscal-year end, which brought about a significant negative impact to many industries and companies, seriously affecting some markets in the educational service industry to decelerate or to take a downturn. As a result, the entire market growth slowed down.
Among the major 15 categories of the educational service industry, those that successfully expanded the market size in FY2019 from the previous fiscal year were the following six categories: “Correspondence education for infants,” “Correspondence education for students,” “English learning materials for infants,” “Schools for acquisition of qualification,” “Corporate business training services,” and “ELearning.”
COVID-19 Influence to Educational Services Offered in Forms of Face-to-Face, Classes, and Commuting
The COVID-19 infections triggered off provision of online educational services at many providers that have been offering the services only in the forms of face-to-face, classes, and commuting. On the other hand, many challenges regarding online have become apparent in the aspect of profitability, student attraction, and quality of the services.
At cram schools and university preparatory schools, the COVID-19 infections negatively affected them such as in decreased revenues, as they became a part of those schools and universities being asked to close after March 2020, and slower growth in new enrollment due to self-restraint activities for attracting students. Although the status has been on the way to recovery after resumption, many cram or preparatory schools seem to find it difficult to cover the loss of the decreased revenues during the closure. It is forecasted that the market of cram schools and university preparatory schools for FY2020 is inevitable to go below the previous-year result. Improvement in the quality of online educational services is expected hereafter, though they were at first offered as an emergency measure.
Private tutor dispatching business market is to face negative impact to business operation, as visit by a tutor has become difficult in the COVID-19 calamity. To cope with such a situation, some business operators have started remote classes online, and some other different ways for providing the services, teaching, and developing business are likely to be implemented.
At entrance exam preparatory schools for infants, face-to-face learning in the classroom had been cancelled at an early stage when COVID-19 infections have started being recognized. To cover this, the classes were transferred to later dates, or online learning was carried out mainly for older exam-imminent infants. The influence of the pandemic in the aspect of revenues, therefore, seems to have been relatively insignificant. On the other hand, however, deteriorated economy and infection risks of commuting to schools and preparatory schools are likely to decelerate the enrollment hereafter.
The markets of intellectual-training-oriented infant education and physical activities and exercises for infants saw cancellation of curriculums as well as extracurricular items that were to be carried out at kindergartens and nursery schools because these venues were asked to close temporarily. The classes that were scheduled to be taken place at commercial facilities had also been cancelled as these facilities were forced to close. Furthermore, the promotional activities to attract students that usually take place in springtime were voluntarily restrained, which also was a negative factor.
Schools for acquisition of qualification had to refrain from sales activities, which led the enrollment to drop by 80% from the previous year at some schools in urban areas. On the other hand, the demands for the public-servant qualification classes and PC classes for at-home working exceeded the previous fiscal year, while the demand for Japanese language education significantly fell due to worldwide restriction of overseas travelling.
The qualifying examination market suffered from negative impact due to decreased number of exams as the exams that were to take place at venues were all cancelled in order to prevent large number of examinees from gathering at a venue. This caused applications for exams to concentrate after summer when the exams were allowed to take place, and some examinees have been on the waiting list for vacancy. Some exam operators introduced online systems to let the examinees take the exam at home.
The market size of total educational service industry (total of major 15 service categories) for FY2020 is forecasted to decline by 2.8% from the previous fiscal year to 2,697,800 million yen.
In addition to difficult environment for the business of educational services for students and pre-school children due to decreasing youngsters, FY2020 saw outspread of COVID-19 infections which temporarily disabled offering of educational services in the forms of face to face, classes, and commuting. Although some businesses took the measures by providing the services online, their provision of services as well as enrollment promoting activities were restricted, which negatively affected their revenues.
After FY2020, many educational service providers are still likely to face the issues of maintaining and improving profitability by securing stable number of students, etc., not to mention the influence of obscure ending of the COVID-19 infections. It seems that M&A and business alliance are likely to increase, aiming obviously at stabilization and growth of business operations by expanding the service ranges, the business categories, the target regions, the target ages and the target populations, and by developing new services and offering longer period of services to customers. Meanwhile, the COVID-19 pandemic has triggered many educational service providers to introduce online services, which seems to increase the options for the users to choose from and diversify the way of service provisions.
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