Wang Feng, a researcher at the 21st Century Institute of Economic Research, reported The Central Office and the State Office recently issued the "Opinions on Further Reducing the Homework Burden and Off-Campus Training Burden on Students in the Compulsory Education Stage" (hereinafter referred to as the "Double Reduction Opinions"). “Double reduction" will change the ecology of the K12 online education industry.

The online education market will not disappear, but faces the question of how to continue to develop and transform. Based on the general theory of enterprise transformation, this report selects the main indicators of the online education industry, and tries to investigate the transformation competitiveness of ten leading online education companies such as Xueersi online school, online tutoring, homework help, VIPKID, and Spark Thinking.

 

1. The live broadcast large class model maintains a competitive advantage

In the subject-based off-campus training market, the leading K12 online education company has formed its own characteristics and built certain barriers. The transformation must have clear goals, decisive actions, and appropriate measures, otherwise there may be tight capital chains, brain drain, and high compliance risks.

The competitiveness of transformation is the result of considering the teaching model currently adopted by K12 online education company, the reserved manpower, funds and other resources, the verification of the business model before the introduction of the “double reduction” policy, the market space of new businesses after the transformation and other comprehensive factors. “Double reduction” has different effects on different teaching models of online education, and the transformation competitiveness of different companies that adopt the same teaching model is also strong and weak.

The main teaching modes of K12 online education include live large classes, one-on-one, online foreign teachers and enlightenment interactive classes. Before the introduction of the ”double reduction" policy, only live broadcast large classes and online foreign teacher companies had made profits, which could be considered as a verified business model.For different teaching models, the degree of influence of the “double reduction” policy is from strong to weak.：

Online Foreign teachers> Enlightenment Interactive Classes> One-on-one> Live Large Classes

●Live broadcast of large classes

The live broadcast large class model is the mainstream model of online K12 education in subject categories. Live broadcast can bring a better learning experience than recording and broadcasting, and large classes can better amplify the effect of famous teachers than small classes and one-on-one. After adjusting the teaching time, the live broadcast large class mode can meet the requirements of the “double reduction” policy.

●One-to-one

Subject-to-subject one-to-one online education companies have closed down one after another, and only the head company is left with 1-to-1 heads, and the losses are serious, indicating that the business model has not yet been verified. Once the capital stops “burning money”, the sustainability remains to be tested. The one-to-one model requires a large number of lecturers, and the profit margins are cramped after the price is limited, and institutions with insufficient operating capabilities will be unsustainable. The one-to-one model is difficult to guarantee standardized teachers, and teacher compliance issues are prominent. After the subject training in the compulsory education stage is positioned as a public welfare undertaking, a large number of talents will withdraw from the industry, and the problem of teacher supply will intensify.

●Enlightenment interactive Class

Subjects such as Chinese, mathematics, and English will be discontinued, and only quality content such as fine arts, calligraphy, and science will be allowed, and online courses will not be allowed to exist. They can only enter the family education scene in the form of “boxes”, and the market space will shrink sharply. Before the introduction of the ”double reduction" policy, Enlightenment interactive classes were operated in the form of recording and broadcasting classes + tutoring. The user stickiness was low, the head company suffered serious losses, and the business model had not yet been verified.

●Online foreign teacher

Foreign teachers will be banned from teaching live broadcasts abroad, and online foreign teachers will be changed to online classes for domestic and foreign education and online classes for Chinese education. On the one hand, the supply of foreign teachers has been greatly reduced. On the other hand, preschool users have disappeared. The online foreign teacher industry may not exist independently, but will be integrated into K12 online education company to meet the specific needs of users.A service.

 

2. The head company's transformation track is crowded, the capital and talent reserves are strong, and the strong have an advantage.

At the specific company level, the transformation of K12 online education companies will also follow the general laws of enterprise transformation, in accordance with the “resource-ability-industry status improvement-industry positioning" (
The paradigm of Resource-Capability-Structure-Production (RCSP for short) is that an enterprise establishes its own competitive advantage through the process of searching and optimizing the industry based on the factors of internal resource capability, the external environment of the industry, etc.

The 21st Century Economic Research Institute set up several indicators for the transformation of K12 online education companies based on the RCSP paradigm, and evaluated the transformation competitiveness of the current head companies in the form of star ratings.

Head K12 online education company transformation competitiveness assessment

It can be found that the transformation direction of the leading K12 online education company is concentrated on the quality and vocational education track, which has a certain homogeneity, making the already narrow track slightly crowded. In terms of business layout, Netease Youdao spans many fields of K12, enlightenment, educational hardware, adult education, and OMO, and is the most diversified; New Oriental Online has a large stock of traditional college students' business, and it has formed OMO collaboration with offline schools of New Oriental. In the end, who can succeed in the transformation fundamentally depends on the quality of products and services.

In the short term, companies with sufficient capital and talent reserves have an advantage. In terms of funds, companies that have been listed or in the listed company system such as , New Oriental Online, Gaotu, Netease Youdao, etc. have an advantage; among unlisted companies, companies that have received high-level financing such as financial counseling, homework help, and Spark Thinking also have a lot of room for operation, but they are facing stock-to-debt or debt-to-equity conversion.Pressure on shareholder settlement; companies such as VIPKID that have not received financing for a period of time are under the most pressure.