The promise of edtech has been there for a long time.
Last two years, the sector has been getting attention and it is turning into real opportunities,†says GV Ravishankar, managing director of Sequoia Capital in India, who has several investments in edtech firms in Asia.
Tan Zhai Yun  Â
Technology has changed the way people learn. From massive open online courses (MOOCs) to virtual classrooms such as Blackboard and on-demand video tutors, education technology (edtech) has emerged as a rapidly growing sector, especially in Asia. It has also attracted a lot of investor interest.
“The promise of edtech has been there for a long time. But I think in
the last two years, the sector has been getting attention and it is
turning into real opportunities,†says GV Ravishankar, managing director
of Sequoia Capital in India, who has several investments in edtech
firms in Asia.
Edtech refers to technology that is used to develop tools for the
education sector. For example, it could be in the form of classroom
management software that enables virtual classrooms, interactive apps
that educate users on various topics or platforms that connect tutors
and students virtually.
The recent boom in Asia is driven by factors such as the growing
mobile penetration rate, affordable internet access, willingness by
parents to pay for education and a strong demand for supplementary
education materials.
One of Sequoia’s investee companies is BYJU’S, an Indian edtech that
is attempting to fill the gap left by a lack of good teachers. It offers
students a personalised learning journey into subjects such as maths
and science via online videos, animations and illustrations in a mobile
app.
Sequoia also has an investment in Edusys, which provides professional
certification and test preparation courses in online, classroom and
hybrid formats. “We are quite bullish on the trend because we are seeing
consumers adapt to online learning models quickly. The younger
generation is very comfortable learning online. So, from our
perspective, we think the market is ripe [for investments],†says
Ravishankar.
Jeffrey Paine, managing partner of Golden Gate Ventures (GGV), sees
the edtech sector as a relatively new segment. Investors must choose
carefully, depending on the country and target market, whose needs may
differ widely. GGV is invested in KooBits, a Singapore-based edtech firm
that teaches math online.
“China is leading the way with edtech. The US tends to have
alternative high schools or universities, whereas India tends to have a
bit more video-based learning and a lot of focus on K-12 [kindergarten
to 12th grade] maths and science,†says Paine.
“In Southeast Asia, Vietnam is growing fast, from K-12 content and
corporate training on how to use Microsoft Excel to online video-based
English tutoring. In Malaysia, one example is a company called
EduAdvisor, which helps inform people who are going overseas to apply
for schools.â€
EduAdvisor has received venture capital funding from 500 Startups and
the KK Fund, according to Pitchbook, a US-based data provider in the
areas of venture capital, private equity and mergers and acquisitions.
According to a 2016 report by UK-based consultancy IBIS Capital, the
edtech market is projected to grow at a compound annual growth rate of
17% to US$252 billion in 2020 globally. While the US previously led the
pack, Asia is currently experiencing the fastest growth in investments
in the sector, going from 46% of the global market to 54%.
This is particularly true for China. According to a 2017 report by
Pitchbook, the biggest edtech venture capital deals had been found in
Greater China in the past five years. Three of the top five edtech
investments since 2012 have also been in the country.
This has led to the birth of several edtech unicorns, including
VIPKid and Yuanfudao. The former is an online English learning platform
while the latter is a homework assistance app. Users can take a picture
of their arithmetic homework, for instance, and the app will use
artificial intelligence to check the answers.
India has an edtech unicorn in BYJU’S, which received Chan Zuckerberg
Initiative’s first investment outside of the US. Some of the big
players in Indonesia and Vietnam are Ruangguru, a marketplace for
private tutoring, and Topica Edtech Group, whose offerings include live
English tutoring and bachelor’s degree programmes online.
Ravishankar believes that the edtech trend is being driven by the
prevalence of computing and smartphones in the hands of end-consumers.
“For example, a huge population in India began to have access to really
affordable broadband in recent years and this is the first time they are
experiencing the internet. That has allowed many companies to reach out
to hundreds of millions of people and it enables consumers to
experience the power of education through technology,†he says.
The other major factor driving edtech investments in Asia is the high
value that parents attach to education. This results in a greater
willingness to pay for education in markets such as China, India and
Southeast Asia.
“Perhaps this goes back to the market structure some of these
countries have. In the US, most people go to public schools, which have
delivered reasonably good quality education. That is why people there
are not as used to paying for education. But in China and India, people
are willing to pay so their children can find jobs. In India, education
is seen as a way of getting out of poverty and getting a well-paying
job,†says Ravishankar.
This means the kinds of edtech companies serving Asian and Western
countries are different. In the US, many edtech firms focus on selling
to school districts whereas in Asia, they may target parents.
“We have seen an example in China in the form of VIPKid. It has a
very interesting model of teaching English to Chinese students through
teachers who are in the US. It leverages the language advantage that
English-speaking countries have to teach students in China, where there
is a huge demand to learn English. That is possible because high-quality
internet access is widely available,†says Ravishankar.
Opportunities in edtech
Edtech companies with the most potential for growth tend to be those
that serve consumers directly or provide content that supplements the
school curriculum. “That is because there are so many students in that
age group and younger people are more comfortable with technology,†says
Ravishankar.
This is especially true for subjects such as English and maths, the
mastery of which can boost the chances of a child getting a good job in
the future. There are many popular edtech companies in the region
targeting those who want to learn English such as the Topica Edtech
Group in Vietnam and Globish Academia in Thailand.
“In Singapore and Malaysia, students learn from courses provided by
edtech companies just like they would by going for offline tuition
classes. You have to take your SPM, so you need to go for tuition
classes where they teach you how to pass your exam,†says Paine.
“The services provided by these companies may be homework-driven. It
could be that I am stuck doing my homework and I need a social network
to teach me how to solve problems. It could be a live video tutoring
session or online curriculum.â€
GGV invested in KooBits because of its track record over the years.
The latter is now used by students in countries such as the Philippines
and Indonesia. The reputation of the Singaporean maths curriculum —
which has been ranked the best in the world by some international
agencies — has increased the attractiveness of the company in the eyes
of its potential customers.
There are also opportunities in the working adults segment, a group
that could comprise more serious learners with a greater willingness to
pay for these services. Sequoia invested in India-based Eruditus, which
partners Ivy League Schools in the US and top universities in the UK to
offer online courses for professionals.
“It [Eruditus] puts some of its undergraduate education programmes
online. This is for professionals who want to learn things such as data
science or the new generation of technology tools that are impacting
management today,†says Ravishankar.
While this idea is not new — it was popularised through MOOCs run by
those like Coursera and Khan Academy — a new set of players, such as
Eruditus, have changed the game for this sub-segment of providers, says
Ravishankar. Users learn online together in a virtual class, listening
to the same teacher in the same time period. They have projects, group
work and online discussion sessions.
“It is an online application of the offline student environment. I
think they have created models that allow for substantially higher
completion rates compared with MOOCs because this creates familiarity
among the cohort. These companies came up in the last few years and we
are pretty optimistic about what that means for edtech and higher
education,†says Ravishankar.
Edtech companies in Asia face a few common challenges. One of them is
gaining the trust of users. Second, the cost of acquiring customers can
be quite high because of the online competition for users.
The business-to-consumer market is where the future of edtech is, in
Ravishankar’s view. That is because business-to-business edtech
companies face challenges in selling their solutions. “That model has
been traditionally hard to scale because you have school networks that
are highly disorganised. Selling to them and collecting money from them
have been tough,†he says.
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These Mining Superpowers Supply the World’s Lithium. Now They Want to Make Batteries, Too.
The race by Tesla Inc., Samsung SDI Co. and other technology giants
to secure supplies of lithium — a key ingredient in batteries for
electric vehicles and smartphones — is creating a unique chance for two
global mining superpowers to reap more value from their natural
resources.
Australia and Chile are looking to lithium to help them escape a
cycle that for decades has had the two nations digging out minerals such
as iron ore and copper, only to see them refined and turned into
valuable products abroad.
Almost three-quarters of the world’s lithium raw materials come from
mines in Australia or briny lakes in Chile, giving them leverage with
customers scrambling to tie-up supplies. The mining nations hope to
bring refining and manufacturing plants that could help kickstart
domestic technology industries.
The first moves in that plan are beginning to take shape.
Scraping a shovel into a patch of dirt near the Australian port city
of Bunbury in March, an executive for U.S.-based lithium leader
Albemarle Corp. heralded a A$1bn ($690m) plan to build the world’s
biggest processing plant of its type. Meanwhile, in Mejillones, northern
Chile, South Korea’s Samsung SDI and Posco are planning to jointly
develop a facility to make chemical components used in batteries.
“Chile and Australia have the advantage,†said Daniela Desormeaux,
chief executive officer at Santiago-based consulting firm SignumBOX.
They have the lithium and “at the same time state incentives, so
companies transforming the raw material can set up shop there.”
Mining rock and exporting it is a familiar story for Australia and
Chile. Australia, the world’s biggest producer of iron ore, has shipped
billions of tons of the steelmaking raw material to mills in Japan and
China since the 1960s. Chile, the world’s largest source of copper,
exports over half of its shipments as semi-refined concentrate.
“It’s an interesting economic model,†Peter Klinken, chief scientist
of Western Australia and an adviser to the state’s government, told a
February conference in Perth. “Take a big rock, make a little rock, put
it on a ship, and then buy something really expensive back in return.â€
The supply of lithium-ion batteries will need to jump more than
10-fold by 2030, BloombergNEF forecasts, with electric vehicles to
account for more than 70 percent of that demand. That’s prompting end
users to act, and Volkswagen AG and Volvo Cars have both struck
long-term supply deals since April.
Where’s the Value?
The first step on the lithium value ladder is refining the raw
material, something that’s currently done mostly in China. Ore from
mines or lithium-rich saline solution from underground lakes in South
America is concentrated into a silvery-gray powder that is sent to be
purified and refined into lithium hydroxide and lithium carbonate. Those
chemicals in turn are processed with materials such as nickel or cobalt
to produce battery electrodes, or with solvents to make electrolytes,
the key parts of the cells that are assembled into batteries.
Each step up the ladder affords more opportunity for profit. By 2025,
the market for mined lithium raw material may be worth $20bn, compared
with $43bn for refined products and $424bn for battery cells, according
to a base case scenario outlined in a 2018 study published by the
Australia-based Association of Mining and Exploration Companies.
Two major lithium miners operating in Chile, Sociedad Quimica &
Minera de Chile SA, or SQM, and Albemarle were only allowed to expand
production on condition that they sell a quarter of their output at the
lowest market price to companies that will develop the materials within
the country. SQM, which already carries out some processing in Chile, is
expanding its domestic capacity.
The strategy is “a golden key†to build a higher-value lithium
industry in Chile, said Sebastian Sichel, executive vice president of
government development agency Corfo, which owns the lithium concessions
in the Atacama desert and issues licenses to miners.
Three separate groups — Chile’s Molibdenos y Metales SA, or Molymet,
China’s Sichuan Fulin Industrial Group Co., and a consortium of Samsung
SDI and Posco — last year pledged to invest a total of about $754m to
build lithium-cathode and lithium-cell factories in Chile to win access
to Albemarle’s material. A second auction in April offered similar
access to SQM’s product, with winners expected to be announced early
next year.
New refining and chemical production capacity will offer Chile
additional revenue, while earnings from lithium exports are also
forecast to rise. The commodity has the potential to become one of the
country’s largest exports after copper, salmon and wine, Sichel said.
Australia could generate more than A$50bn ($35bn) in annual revenue
and support about 100,000 jobs by developing a battery materials sector,
according to a 2018 study for a regional development agency. That
compares with about A$1bn currently in annual lithium exports.
Australia’s government in April pledged A$25m to support a five-year
research program to expand its battery supply chain.
China’s Tianqi Lithium Corp. will later this year begin selling
lithium hydroxide from a new processing facility in Kwinana, south of
Perth. Tesla, battery maker LG Chem Ltd. and Mitsui & Co. have
agreed to supply deals for output from a rival plant nearby that’s being
built by Chile’s SQM and an Australian partner.
Efforts by Australia and Chile to wrest more control over refining
from China are being helped by trade tensions. “They could definitely
challenge China†in the next-step processing of lithium, said James
Jeary, an analyst at CRU Group in London. Lithium producers will
increasingly integrate mining and refining capacity, he said.
“We are hearing more and more that diversity of supply is critical,â€
said Phil Thick, Tianqi’s general manager in Australia. The producer’s
Kwinana plant will mainly supply customers in North America and Europe,
or carmakers in those regions via their suppliers in South Korea and
Japan, he said.
China’s in Charge
The producers plan to do more than just first-stage refining. Western
Australia has developed a “Lithium Valley†strategy to span the supply
chain. Chile also hopes to manufacture battery cells.
But there are major hurdles. Neither country has a major car
industry, and the auto sector typically prefers component suppliers to
be close to manufacturing hubs. The technical challenge of producing
battery components may require imported expertise. Costs and
environmental concerns are also factors.
A dispute between Corfo and Albemarle has already delayed progress
for Molymet, the Samsung SDI and Posco consortium, and Sichuan Fulin in
Chile, prompting concern the groups could opt to invest in battery
projects elsewhere. In Australia, lithium producer Neometals Ltd. has
delayed a plan to build a refinery, citing higher-than-expected costs.
There may only be a brief window for Chile or Australia to get a
foothold in the battery industry as rival mining nations join the fray.
Argentina and Bolivia have saline deposits near the border with
Chile. Countries from Serbia to Mali are keen to extract deposits in
their territory, and Russia, which has been producing lithium products
for more than 60 years for its nuclear industry, is already trying to
attract higher-value investment by setting up one of the world’s largest
lithium-ion battery plants in Novosibirsk with Chinese partner Thunder
Sky Group.
Persuading battery makers to set up operations in Australia or Chile
will require state incentives, said Vivas Kumar, a principal consultant
at industry adviser Benchmark Mineral Intelligence and previously a
member of Tesla’s battery supply chain team.
Lowering the cost of battery cells “continues to be the most
important focus area across all major companies,†Kumar said. Automakers
“are increasingly becoming involved with their cell manufacturing
partners’ supply chains in recognition of this.â€
Sichel at Corfo believes lithium offers Chile a chance to escape the
so-called resources curse, where mineral booms suck in investment at the
expense of manufacturing.
If we don’t do this, “there is a gigantic risk that our growth keeps
depending on the next hot commodity,†he said. “We remain stuck, unable
to make the jump to developed-nation status.â€
Addressing India’s Reskilling Challenge – A Report By AIM
Even with the third-largest developer base and a substantial tech-savvy talent pool, India lags behind its peers on major AI indicators.
This is despite a thriving startup ecosystem, high-growth companies which have made a substantial investment in setting up CoEs and the Government investing in building a robust tech infrastructure.
Behind the AI and data analytics boom, lies the story of a massive talent gap as workforce struggles to remain employable. The skills’ shelf life has shortened, with technology changing exponentially over the last decade, skills that were relevant at the beginning of the career have become obsolete. In order to remain employable, the workforce needs to reskill to take advantage of new opportunities. The rise of edtech companies in India is not surprising, given the huge clamour for continuous learning that has taken root in the professional sphere. This is backed by the rise of emerging technologies — artificial intelligence, its subset machine learning and data science which has spawned a booming job market revolving around new technologies that has substantially transformed India’s IT labour market.
The changing job economy has resulted in new opportunities for the
Indian workforce. As estimated by a consulting major, AI has the
potential to add US$957 billion, or 15 percent of India’s current gross
value in 2035. The booming economy, fuelled by AI and advanced analytics
requires more Indians to enter the workforce with a different
skill-set. As per our estimate, close to 97,000 AI positions lie vacant
in India.
But,
the challenges are also increasing multifold — on the one hand India
Inc is struggling with disruptions like automation that are redefining
jobs and secondly, it is grappling with finding the right talent with
the right skillset for AI/ML and data science teams. Meanwhile, the
upcoming generation that will enter the workforce soon is fed on an
outdated curriculum that hasn’t kept up with the industry’s demands.In
our report, we dig into the educational stakeholder landscape to see how
they are transforming the skills market by developing training courses
and certification programmes that correspond to in-demand skills
required today. We look at the type of educational institutions offering
data and analytics programs; how the educational landscape is changing
in response to the heightened demand for analytics skills and what needs
to be done to fill the skill gap.
The second half of the report looks at our last three years ranking
data to find out the winning attributes that have helped analytics
institutes rank on top consistently and how other training institutes
have fared over the last three years.Key Highlights
The online reskilling market is estimated to be $93 million and is expected to grow at a rate of 38%.
As compared to other educational categories (secondary supplemental
education providers and GMAT/ GRE/GATE test preparation providers) the
reskilling market is more mature
Current market is largely B2C driven but educational stakeholders are also actively catering to the B2B segment
Reskilling market in India is driven by the needs of a large working population looking for industry-relevant skills
Online key players are also moving towards blended educational
solutions by creating offline touchpoints to provide peer interaction
Emphasis on personalised learning has led to mentorship and offline
touchpoints that helps students gain handson experience for particular
concepts
Business Analytics course was the starting point, besides this,
other courses that are gaining traction are Artificial Intelligence,
Machine Learning, Data Science & Analytics & Data Engineering
Partnerships between analytics education providers and universities in offering niche courses
Higher demand for short-term diploma courses in in-demand areas such as Blockchain, Data Science and Machine Learning
Virtual classroom concept that began in 2014 has brought high quality analytics education more accessible
Key tools learnt are R, SAS, Python, on big data end Hive, Pig, Hadoop and in AI/ML end Tensorflow and Keras
Key Players In The Reskilling Market
In order to capitalise on these opportunities, IT companies,
educators and policymakers need to develop a deeper understanding of the
existing workforce, the skill-set required in the future, and the gaps
that will need to be addressed. This implies that these three key
players need to align the broader economic developer agenda with the
shifting job market and work towards building a strong talent that has
the baseline and digital skills required for current landscape. At the
Government level, policy makers will have to assess secondary and
postsecondary education and align it with the skills that are required
for tomorrow. Many leading Indian IT majors have undertaken
employer-training initiatives, pre-employment training and have also
provided their own courseware. Collectively, the key stakeholders can
foster a workforce development ecosystem and provide domain specific
training with a job-first approach. Given this scenario — educational
stakeholders have made a very strong business case for reskilling the
workforce and have actively partnered with renowned educational
institutions to launch technical certifications and degree programmes
tailored to fill the skill gap.
Analytics Education Landscape
The nature of analytics education has evolved over the last few years
and a mix of models have emerged in the online and offline space to
accommodate the changing requirements of students. Learners seek a
career-focused analytics education augmented by classroom setting that
prepare them for job functions in data analytics space.
• In cases where learning is delivered purely online, participants
look for realtime learning in a format that allows learners to pursue it
at their own pace
• Candidates look for course content created by top instructors, with
industry and university collaboration to provide a well-rounded
analytics education
• Executive programs are also in high demand as these are intended
for senior professionals who want to renew their skillset and understand
how data can be helpful in managerial decision making
• In case of executive analytics courses, technical skills such as
data management are augmented by soft skills such as business
understanding and communication
• Analytics education providers in India mostly offer Business
Analytics (BA) and Business Intelligence (BI) programs that combine
analytical number crunching, reporting and visualization techniques
Learning Formats
The learning formats can be broadly put under 4 categories:
Self-paced learning delivered via recorded video content
Instructor-Led live classroom sessions delivered online
Blended learning format with classroom and online delivery
Bootcamps for intensive, in-person learning that provides a hands-on experience
Around 87 percent of analytics courses from private training institutes are delivered in the self-paced learning models
6 percent are delivered in the hybrid (Self-paced and Instructor-Led
online) format and 4 percent in Instructor Led weekend and self-paced
format
There’s only a 3 percent uptake for weekend classroom format
On average, analytics courses by private institutes offer 105 hours of instructor contact hours
The hybrid model of self-paced + online Instructor-Led courses has the highest number of contact hours at 157.
The blended learning opportunity allows learners to get continuous feedback and participate in real-time assessment
Weekend-only model has the least contact hours at 75
For those looking for face-to-face learning environment, weekend model is the best fit
Digging Deeper: India’s ed-tech space is more than Byju’s
While trying to understand India’s edtech space, it is worth remembering what a huge market it is.
A joint study by Google and KPMG had estimated that the online education sector in India would grow at a compounded annual growth rate (CAGR) of 52% to $1.96 billion by 2021.
Due to acute disparity in learning levels caused by social, economic,
geographic and other factors, India may be in the danger of
under-utilising or losing out on the untapped capital of human
potential. Education technology (edu-tech/edtech) could play a vital
role in meeting the learning needs of underserved sections of the
populace. In this space, the name we hear loudest is Byju’s, the
Bangalore-based company valued at over four billion dollars (or five,
according to some estimates), which raised $540 million from Naspers and
others just last year. It is the fourth most valued startup in the
country. Unacademy, which much like Byju’s also offers online tutoring
to students, has raised 38.5 million dollars to date. Last year in
December, Toppr, another edtech startup which claims to have six million
users, had raised $35 million led by education-focused investor Kaizen
Private Equity. CollegeDekho has raised upwards of 13 millions dollars
to date. Even Mukesh Ambani seems to want a slice of the Indian edtech
pie considering he bought a 38.5% stake in Noida-based startup
Extramarks. Byju’s might have put Indian edtech on the global map, but
increasingly, the space is more than just Byju’s.
India’s education market, estimated to grow to $5.7 billion by 2020,
has emerged as a lucrative opportunity for edtech startups and VCs
alike. On this edition of Digging Deeper with Moneycontrol, we will try
to understand both the potential of edtech startups and the reasons why
some of them have succeeded spectacularly in what was, just a few years
ago, a relatively unexplored field.
Growing interest
A recent Financial Express report cited a study by Karthik
Muralidharan of the University of California at San Diego, Abhijeet
Singh of the Stockholm School of Economics and Alejandro J Ganimian of
the NYU Steinhardt School, according to which, incorporation of
educational technology can help accurately assess learning levels and
customise pedagogical support to bridge intra-classroom gaps.
Andhra Pradesh, we are told, is pioneering tech-enabled pedagogy, and
as an early-bird adopter of edu-tech, it will be leagues ahead of other
states. The piece said, “The state, from the current academic year,
will be using Personalised Adaptive Learning (PAL), or software-based
assessment of the academic standing of the students in a classroom. PAL
will first assess the student’s comprehension levels and then prescribe
targeted learning. Students will take the test online, and based on
their individual reports, remedial coaching will be provided. Apart from
facilitating tailored learning, PAL will also ease monitoring of impact
of remedial classes via dashboards for individual students where
teachers can track progress.â€
PAL is being rolled out in over 2,600 schools in Andhra Pradesh.
After tests in 56 schools proved successful, many schools will engage
with PAL via laptop but others will do so over tablets.
The initiative, as per a report in The New Indian Express, will
involve intensive training of teachers, school administration and
bureaucrats, and is expected to impact over 2.5 million children. Andhra
Pradesh is, in fact, experimenting with edtech in a big way.
According to the piece, after introducing QR codes in non-language
subject textbooks, the state is now doing the same for language
textbooks for classes VI-X.
The NIE said, “Scanning the QR codes assigned to different chapters,
students can access supplementary video lectures or tutorials. They can
also use the QR codes to take quick, online assessment tests that will
help them, their parents and teachers measure their actual levels of
comprehension.
Such an ecosystem surely makes addressing gaps in learning levels
easier than the conventional method, of remedial classes. Also, given
boards like CBSE are now increasing reliance on schools’ own assessment
of learning levels, by mandating compulsory internal assessment for
boards, pedagogy propped by technology can be made to deliver more
efficiently.â€
At another level, edtech start ups are benefitting from growing interest not just in India but also from overseas markets.
Big numbers
The News Minute carried a report recently which spoke about how New
Delhi-based edtech startup XploraBox raised an undisclosed amount in
funding from SucSEED Venture partners. The four founders of XploraBox
include Rishi and Shweta Das, Dhirendra Meena and Rishabh Gupta. The
startup was founded in 2015. The funds will be used to scale up and
establish overseas presence beginning with North America and GCC
countries as it targets a revenue of Rs 100 crore in 3 years. The other
investors to have participated in this round include Green Shoots
Capital, Metaform Ventures LLC, JITO Angel Network, SWAN Angel Network
etc.
And what has Xplorabox been up to? Well, it has come up with a
business model that has a subscription box for learning through play in
children. We quote, “The basic objective is to try and wean away the
kids, aged between two and twelve, from TV and mobile and channelise
their attention to other constructive activities. Learning through fun’
is their mantra, with fun stories and educational activities which are
offered through their boxes. The company has served more than 50,000
customers and dispatching kits to over 500 cities every month.â€
According to Rishi, on an average, children are spending over 3 hours
every day in front of screens and that is impacting their brain
development. Xplorabox provides modules to boost essential developmental
skills of the children. The startup believes that the 50,000 customers
they have serviced so far have reported excellent response and more
products could get launched in the coming months.
The aim is to provide learning aids that can enhance various
developmental skills like motor skills, cognitive skills etc in children
to counter issues like Computer Vision Syndrome (CVS), unhealthy
posture, and increasing cases of myopia (shortsightedness).
The startup is looking at prospects running into billions with the
large population of kids in the target age group and hopes to tap into
more potential markets.
Wider horizons
The edtech market keeps expanding and reinventing itself. In a recent
development, Byju’s and Disney may launch a co-branded new app
targeting kindergarten to Class 3 students. The Economic Times reported,
“The partnership is in line with Byju’s aspirations to expand beyond
India into other large English-speaking markets such as the US, UK, and
Australia.
Disney Byju’s Early Learn, as the service is called, will be a
standalone app that is likely to go live sometime next week. There have
been talks that Disney has made a financial investment into Byju’s, but
that has not come through yet, sources said. Apart from using the name
of the Burbank, California-headquartered company, the app will boast of
characters from popular Disney brands such as Cars, Toy Story and
Frozen.â€
Byju’s has entered into a revenue-sharing agreement with the media
company. While the exact terms of the deal could not be ascertained, it
is learnt to be in the range of a 10-15% revenue share that Disney
usually sets.
ET said, “While Byju’s will oversee all content created for the app,
Disney is expected to work closely with the edtech firm to ensure
stories are weaved around its characters. Kids using the app will get to
watch video-based tutorials that will feature its popular cartoon
characters. Even though the current deal with Disney is strictly a
revenue-sharing agreement, Byju’s has been in talks with the media giant
to explore an opportunity for investments as well. In March, when
Byju’s raised $25 million in funding from General Atlantic, its
valuation jumped to $5.4 billion, making it the fourth most valuable
private Internet company in India.â€
Customer acquisition and other challenges
With time, edtech companies are dealing with challenges like growing
customer acquisition costs. A recent ETtech piece addresses this very
issue. It points out how India’s fast-growing educational technology
space is now going full steam ahead to build organic user acquisition
channels.
The average cost-per-click on digital channels goes up 5-7% every
year organically, but it could be around 30% year-on-year for edtech
since it is seasonal for most players, according to industry-watchers.
Moreover, India suffers from extremely low conversion rates as courses
are often large-ticket purchases.
The report says increasing cost of user acquisition has forced
players like Edureka to acquire 60% users organically through free
YouTube videos and high-quality blogs. Still, the company spends Rs 1
crore every month on digital marketing.
Lovleen Bhatia, co-founder and CEO of Edureka says and we quote, “You
can’t win with Google and Facebook, so you need to find other channels
of acquiring customers. For us, our blog, community and YouTube videos
have worked well so far.â€
Edureka is also working on an AI chatbot that will advise users on
how to build their careers and Bhatia hopes that the counselling bot,
which they are trying to make open source, will add to customer
acquisition .
Byju’s, mentions the piece, a leader in the K12 education sector, is
looking at television as it freezes digital ad spends. The company has
begun advertising regionally, with celebrity endorsers. They have
launched campaigns with Mohanlal in Kerala and Mahesh Babu in AP and
Telangana and plan to launch many regional ads in the coming year and
their spend on TV advertising will be roughly 20% of their total
revenue. Byju’s reported Rs 1,400 crore in revenues in the previous
fiscal, and is expecting a twofold growth in the current year.
The piece also mentions Simplilearn, another e-learning platform for
tech professionals, which gets 1.5 million monthly visitors on its site,
out of which 50,000 convert into enquiries. Out of that, 10,000-12,000
end up buying its services. Krishna Kumar, CEO of Simplilearn, says in
the piece that 40% of its inbounds are from referrals and another big
chunk from free video uploads on YouTube. It would have otherwise spent
$1.5 million each month on digital channels just to sustain current
inbound traffic, he says.
Eruditus, an online executive training platform, says a majority of
its users come through ads on Google, Facebook, LinkedIn and Pinterest.
Ashwin Damera, CEO of Eruditus, says in the article, the cost per lead
for its course on Design Thinking, which it does in partnership with
MIT, is $15 in India versus $35 in the US. However, acquiring users in
India is more expensive as conversion rates are five times lower than in
the US.
Big players
On an earlier podcast, we had examined the boom in the e-learning
business scape in India and profiled e-learning companies like Vedantu,
which in November 2018, had managed to raise $11 million in a Series B
funding round. Vedantu, as is well-known, is an interactive online
tutoring platform where teachers provide school tuitions to students
over the internet, using a real-time virtual learning environment named
WAVE, a technology built in-house.
This brings us to the point we began with. Such technological
development initiatives push e-learning beyond regular pedagogical
methods. Companies are making learning sessions more personalized by
tracking the student’s attention span and concept understanding using
machine learning, facial recognition etc.
While trying to understand India’s edtech space, it is worth
remembering what a huge market it is. A joint study by Google and KPMG
had estimated that the online education sector in India would grow at a
compounded annual growth rate (CAGR) of 52% to $1.96 billion by 2021.
The idea that brick and mortar structures are obsolete for expansive learning is at the core of the e-learning boom in India.
It’s not just Vedantu, but most e-learning businesses including
Byju’s and Unacademy understand the limitations of conventional teaching
and learning and the potential of technology-driven educational models
that can reinvent themselves to keep up with the evolving needs of the
students. Technology has undoubtedly a wider reach than brick and mortar
structures and content startups can reach up to 200-300 million new
internet users from tier 2 and tier 3 cities.
Just to refresh your memory, Unacademy has raised a neat $21 million
in a Series C round and Byju’s unicorn status as India’s fourth most
valuable start-up behind Paytm, Ola, and Oyo, is only too well known.
What is a unicorn in business terms? Well, it is a privately held
startup company valued at over $1 billion. The term was coined in 2013
by venture capitalist Aileen Lee, choosing the mythical animal to
represent the statistical rarity of such successful ventures. The
brand’s success story is now a Harvard Business School case study no
less.
What are the factors contributing to this boom?
The upsurge in e-learning enterprises could partly be attributed to
inexpensive data costs and the increased access to high-speed internet,
and with half a billion more Indians expected to be online for the first
time in the near future, there is no reason to think small.
Some other big dreamers in this space are Meritnation, Cuemath and Toppr and Byju’s is a success story to emulate for many.
Mint has reported and we quote, “Byju’s is part of a small but
growing number of tech startups that have rapidly grown their businesses
and consistently attracted blue-chip investors. In July 2017, Byju’s
raised about $40 million from Tencent Holdings Ltd, months after raising
$30 million from Verlinvest. Since starting out in 2008, Byju’s has
raised over $240 million from Tencent, Verlinvest, Chan Zuckerberg
Initiative, Sequoia Capital, Lightspeed Venture Partners and Aarin
Capital, among others.â€
Quality education is not equally dispersed in India and that has
fuelled the need for e-learning modules. Roman Saini, co-Âfounder and
chief educator of Unacademy had written in Hindustan Times on November
8, 2018 and we quote, “The education divide in India with respect to
quality and accessibility has existed for far too long. It is difficult
for the existing physical infrastructure to meet the learning needs of
the burgeoning population of our country which will touch 1.5B by 2030
and 1.7B by 2050 (equal to the population of China and USA combined).
Digital is gaining acceptance across numerous sectors and it is only
right that the education sector too reaps benefits of this digital
transformation.â€
There are barriers created by inadequate infrastructure, concentrated
content and language issues that prevent large numbers of
knowledge-hungry demographics from the benefits of a global education.
As he says, “It is impossible to have great teachers in each and
every village/district in India. Similarly, the best teachers should not
be restricted to certain institutes of the world. This is where
e-learning comes in. It can level the playing field for all students.
Students, in both rural and urban areas, can get access to the best
learning resources, learn at their own pace and in the comfort of their
own homes. Another key advantage with e-learning is that it is much
easier to design courses with the latest online reference material than
publishing crores of books.â€
The possibility that online education could benefit India’s youth,
that forms more than 50% of the population, is exciting for e-learning
entrepreneurs, educators and potential learners.
New methodologies
E-learning predictably expands the scope, depth and reach of
information with interactive tools, AI and technology as well as live
online interaction.
Byju Raveendran believes e-learning can develop and inculcate
personal initiative in students and that bodes well for their future
success as opposed to the “spoon feeding†that conventional education
dispenses.
He told Mint in April 2017, that even when he was not an education
entrepreneur, he was known for pre-exam hacks and shortcuts that made
him an exceptional student. After nailing a perfect score in CAT twice,
and after turning down interview calls from all the Indian Institutes of
Management (IIMs), and working abroad for a couple of years, he decided
to take six months out to see what would happen if what he had learnt
was taught with a structure.
So successful was his module, recalls Mint, that Raveendran started
conducting workshops on the weekend, with the classes growing in
popularity. When one classroom wasn’t enough to accommodate students, he
booked an auditorium with a seating capacity of 1,200. From jet setting
across India to teach, he decided to take his modules to students and a
success story was born in 2011.
At the core of his teaching module and business model is not
derivation but independence, logic and life skills. Soon he started
using a video format. As Mint informed, his high-production-value videos
and content caters to the K-12 (kindergarten-Class XII) segment, with
more than 500 members in the research and development team.
Mint also reported that there are about 20 million children between
Classes VI and XII in India who have access to the Internet and take
private coaching classes, which translates to an addressable market
opportunity of about $2.5 billion, according to research by consulting
firm RedSeer Consulting. Not surprising then that since launching in
2015, the Byju’s app has had more than six million downloads. The number
of people who buy its premium service is growing every month, claims
the firm.
What also benefits the company is that a student starting young with
Byju’s will possibly continue with the company and it is then looking at
a four-year or seven-year timeline with the same user.
Byju’s has also designed personalized learning through what it calls a
“knowledge graph.†The app learns which concepts a student may need
more practice at, and adjusts learning plans accordingly.
Raveendran also told Mint and we quote, “Our product and go-to-market
are both targeted at students. B2C is our only channel. We’re not
trying to change the system. It can easily coexist with the system. It’s
not a replacement of teachers.â€
Byju’s dream is to take education deeper and try and bridge India’s
rural and urban divide and to create a learning culture where students
learn and not just memorize. And develop a life-long thirst for
knowledge that was earlier restricted by the fear of exams. The Byju’s
smartphone app—and portal apart from offering study material for classes
4-12, also offers help to succeed at competitive exams like JEE, NEET,
CAT, IAS, GRE and GMAT.
The positively disruptive force of e-learning
A Sunday Guardian piece by Priya Singh about just how digital
technology has proved to be a disruptive force for the education sector
in India and has changed the old paradigms of teaching.
She wrote, “According to this new model of education, driven for the
most part by digital technology, the teacher is sidelined, as content—as
learning—takes centre stage.â€
She also cites Byju’s success to prove her point, and mentions the
numbers that deserve to be repeated here. The platform now has over 22
million registered users, 1.4 million paid subscribers, an addition of
1.5 million registered users every month, more than 100% growth and the
pride of becoming the first Asian company to get investment from the
Chan Zuckerberg Initiative, the philanthropic organisation founded by
Facebook’s boss Mark Zuckerberg and his wife Priscilla Chan. And all
this was achieved in just three years.
The possibilities of learning online are inexhaustible and Coursera, a
California-based online learning platform that offers certified courses
from the world’s best universities—including Yale, Princeton and
Stanford—has been adding rapidly to its subscriber base in India.
Raghav Gupta, Director, India and APAC, Coursera told Sunday
Guardian, “India has a lot to gain from online learning. About one
million people enter the workforce every month with no guarantee that
they will have the competencies to succeed in jobs of the future. Even
as technology renders many skills obsolete, online learning will be the
transformative force that empowers millions to acquire new skills. We
see this trend reflected in our growth in India. We now have 3.3 million
Indian learners on the platform, while adding 60,000 new users every
month. Our platform is giving employers and professionals the
much-needed opportunity to access the best and most relevant content the
world has to offer and learn the skills needed to compete in the new
economy.â€
Another big player, says the piece, is edX, a “massive open online
course†(MOOC) platform, founded by the Massachusetts Institute of
Technology and Harvard University. It offers courses on subjects like
artificial intelligence, machine learning, data science, business and
management, leadership, soft skills, and so on.
And not just students but teachers can benefit from e-learning by
referring to online courses taught by world-class professors and adopt
flip-learning pedagogy.
Observers and most e-learning businesses agree though that classroom learning cannot be replaced but it can surely be updated.
The piece quotes Divya Gokulnath of Byju’s, “Technology has played a
key role in disrupting this sector and will continue to shape the
teacher-student relationship by offering better accessibility,
distribution and formats of delivery.â€
The dream of learning from a Harvard professor in a small Indian town,
no longer seems impossible and the chalk and talk module may be in for a
long-term overhaul. The world is becoming a smaller place each day, and
with it, the dreams of children everywhere in the world are becoming
bigger. And edtech is helping them realizing these dreams.
Source: https://www.moneycontrol.com/news/podcast/digging-deeper-indias-ed-tech-space-is-more-than-byjus-4053471.html
Posted by AGORACOM-JC
at 10:39 AM on Tuesday, June 4th, 2019
Investment Highlights
Kenbridge property has a measured and indicated resource of 7.14 million tonnes at 0.62% nickel, 0.33% copper
17.5 (21.8 fully diluted) percent equity stake in Eloro Resources and 2 percent NSR in their La Victoria property
Signed Binding Letter of Intent to Purchase Sill Lake Lead-Silver Property, Ontario Read More
Kenbridge Ni Project (ON, Canada)
Advanced stage deposit remains open in three directions, is
equipped with a 623m deep shaft and has never been mined.
Preliminary Economic Assessment completed and updated returned robust project economics and operating costs including a NPV of C$253M and cash costs of US$3.47/lb of nickel net of copper credits.
Plans for Kenbridge include updating PEA,
advancing the project through to feasibility and exploring the open
mineralization at depth
FULL DISCLOSURE: Tartisan Nickel Corp. is an advertising client of AGORA Internet Relations Corp.
Posted by AGORACOM-JC
at 10:19 AM on Tuesday, June 4th, 2019
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——————-
Apple Publishes Bitcoin Icons & ‘CryptoKit’; iPhone Crypto Wallet Coming?
The new Mac Pro is grabbing the headlines while a ‘CryptoKit’ for developers is getting crypto adopters excited. | Source: Photo by Brittany Hosea-Small
By CCN: Apple’s Worldwide Developer Conference (WWDC) is underway, and while most of the focus is on iOS3, Apple quietly revealed a new upgrade for developers called CryptoKit.
Apple also released its new icon set for designers which feature four bitcoin logo
It begs the question, what are Apple’s plans for cryptocurrency integration?
Apple’s Frederic Jacobs announced new CryptoKit for developers
Apple CryptoKit: a path to a hardware wallet?
CryptoKit provides developers with a new toolkit for cryptographic
functionality. It means app developers can integrate operations like hashing, key generation, and encryption. In particular, CryptoKit will facilitate the use of public and private key management.
“Use public-key cryptography to create and evaluate digital
signatures, and to perform key exchange. In addition to working with
keys stored in memory, you can also use private keys stored in and
managed by the Secure Enclave.â€
Viktor Radchenko, founder of TrustWallet, said CryptoKit brings Apple one step closer to full hardware wallet functionality.
“Only a few steps away before you can turn your phone into a hardware wallet.â€
TrustWallet’s Viktor Radchenko said Apple is one step closer to facilitating a hardware wallet
Apple’s Frederic Jacobs, part of the cryptographic and security
engineering team, said CryptoKit is “a fast and secure Swift API to
perform cryptographic operations.â€
Jacobs did not respond to a request for further comment at the time of publishing.
Apple bitcoin icons
The company also released the new San Francisco icon set designed for
iOS3. Among the set of 1,000 icons are four bitcoin logos. Two circular
BTC logos and two square. There are no ethereum logos or any other
cryptocurrency.
Apple releases new icon set complete with bitcoin logos
The new icon set means developers can easily integrate bitcoin icons into their apps.
Apple’s CryptoKit will allow developers to perform common cryptographic operations, such as:
“Compute and compare cryptographically secure digests†and “generate
symmetric keys, and use them in operations like message authentication
and encryption.â€
For developers, it provides a toolkit to build more secure apps and frees apps from handling raw pointers.
The tech giant will reveal more about CryptoKit in a WWDC session on Wednesday.
Still too early to predict Apple’s crypto plans
It’s too early to draw any conclusions about Apple’s cryptocurrency
plans, if there are any. But at least Apple is providing the tools for
cryptocurrency developers to build on iOS. For now, consider this the
start of a much longer story.
Ben is a journalist with a decade of experience covering financial
markets. His writing has appeared in The Huffington Post and he worked
at Block Explorer, the world’s longest-running source of Blockchain
data. Reach him at benjamin-brown.uk
Posted by AGORACOM-JC
at 2:54 PM on Monday, June 3rd, 2019
SPONSOR: Tartisan Nickel (TN:CSE)
Kenbridge Property has a measured and indicated resource of 7.14
million tonnes at 0.62% nickel, 0.33% copper. Tartisan also has
interests in Peru, including a 20 percent equity stake in Eloro
Resources and 2 percent NSR in their La Victoria property. Click her for more information
Years of underinvestment, long lead times for mine development and a coming surge of electric vehicle demand are all bullish factors for nickel, said Michael Beck, managing director at Regent Advisors.
Beck spoke to Kitco News at Palisade Global’s Hard Asset Conference in Georgia on Jekyll Island held mid-May.
Nickel is a key component of lithium-ion batteries, and Beck said
Tesla’s next generation of lithium-ion batteries uses more of the
element.
“The ramp-up of demand is just beginning,” said Beck.
“Electric vehicles are going to impose a new demand source on nickel
that never really existed before. It takes seven to 10 years to bring on
new nickel projects. So you have the makings I thinkâ??at least this is
our thesisâ??of a perfect storm.”
Interview is edited for clarity.
Kitco: What impact is the electrical vehicle revolution going to have on nickel?
Michael Beck: Nickel is probably the single most
important metal component in battery fabrication. It’s where all of the
energy is stored and increasing the battery chemistries are being
refined to allow the inclusion of as much nickel as possible. The more
nickel, the higher the energy density of the battery. And nickel is
particularly interesting from a supply-demand outlook because of the
collapse of nickel prices in 2007. The commodity has remained relatively
depressed. The current nickel price is US$12,000 a tonne versus the
high in 2007, which was $15,000 a tonne. And in this intervening almost
12 years there was no material investment in new nickel capacity. The
last 12 years has been a draw down of excess inventory, and that’s
coming to an end. The ramp-up of demand is just beginning.
Electric vehicles are going to impose a new demand source on nickel
that never really existed before, particularly for class one nickel. It
takes seven to 10 years to bring on new nickel projects. So you have the
makings I think, at least this is our thesis, of a perfect storm. You
have a baked in structural deficit for the next 12 years. You have seven
to ten years lead time to bring in new capacity, and all of a sudden
you have inventories in the next 18 months going down to almost zero.
You also have this new demand source that never existed for nickel. So
that gets us rather interested as prospective investors. And in the
universe of metals it’s our favorite. We think in the next two to three
years you’re going to see a major up-tick of nickel price, and that’s as
shortages emerge and that’s what’s going to be required to get new
investment in the sector.
Kitco: Why is nickel important for electric vehicles?
Michael Beck: Well it’s interesting. Elon Musk said a
couple of years ago that really lithium-ion batteries was a misnomer.
It should be really called nickel-iron, and that’s because that’s the
energy density of a battery. The energy is stored by the nickel units.
And if you look at an average Model 3, it consumes something on the
order of 30 kilograms of nickel. And increasingly the cathode makers,
which are really the principal components for battery fabrication, are
tinkering with chemistries that use more nickel. The higher the energy
density, the longer range you have on the vehicle. It is the most
important element in in a battery. Without nickel you don’t have the
energy storage.
Kitco: If you have a nickel thesis, how does this play out in the junior space?
Michael Beck: It’s a little bit of a challenge
because the world’s largest nickel producer, at least in the Western
world, is Vale. But Vale is really an iron ore producer. Nickel
represents probably less than 15 percent of the company’s portfolio. So
if you buy Vale, you’re not really getting nickel. You’re getting an
iron ore share. Vale has its own challenges. It has a rather impaired
balance sheet, which is why it trades where it does. Another interesting
nickel producer that we own is Independence Group NL out of Australia.
They have a market cap of about a $1.5B, and the company is growing its
nickel production. But you’re right, there aren’t a lot of opportunities
to invest in existing nickel producers, because they’re few and far
between.
Maybe the most interesting in the larger cap of established players
is Norilsk. They’re the number two nickel producer, and they’re based in
Russia. That’s probably the single best large-cap way to get exposure
to nickel. It has a good dividend yield. It’s a major producer of the
metal, and when nickel goes up, their share price goes up accordingly.
At the smaller cap end of the spectrum, there are a bunch of smallish
nickel explorers and emerging developers.
One that we like particularly is a company called Giga Metals. It’s
listed on the TSX. Even though it has a market capitalization of less
than $10 million, it happens to own the world’s second-largest
undeveloped nickel sulfide deposit. Nickel sulfide is the preferred form
of nickel for the production of class one nickel, which is what is
required for a battery fabrication. We think the company is completely
mis-priced asset, and we look at it as an un-dated call option on
nickel. So if our thesis on nickel is correct and nickel goes from
$12,000 a tonne to $20,000 a tonne and then perhaps beyond to $50,000 a
tonne where it peaked in 2007, then this stock will be
disproportionately re-rated and you have a chance, if your thesis is
right, to make 10 to 20 times your money. If you’re wrong, maybe the
market cap goes from where it is today, from $8 million to $4 million.
So we like to see those kinds of bets. There is another company that’s
sort of similar, and it’s an asset is not nearly as large but it’s
called Grid Metals, and it has a relatively advanced smaller nickel
sulfide deposit in Manitoba and it has a market cap of $3 to $4 million
dollars.
But again any of these companies, whether they’re at the microcap end
of the spectrum or whether they’re big established producers like
Norilsk or somebody in between, will benefit when the nickel price
rises. We’ve got a fair degree of conviction about our thesis: the
adoption rates for EV will accelerate. Nickel shortages will emerge, and
all these companies with nickel exposure will benefit.
Posted by AGORACOM-JC
at 1:10 PM on Monday, June 3rd, 2019
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Global Esports Popularity Give Gamer Companies Reason To Be Bullish
Esports have joined the big leagues, Goldman Sachs analysts wrote in a recent report about the new subsection of the video game industry. China aside, the esports industry already has a larger audience than Major League Baseball.
Goldman estimates the monthly size of competitive esports gamers, 167 million as of year-end 2018, will hit 276 million by 2022, basing their forecast on a NewZoo survey.
Right now, somewhere in China, bulldozers and crane operators are building a new theme park. It’s not the latest Lionsgate Park you’ve read about, centered around themed attractions based on movies like Hunger Games. Oh, it’ll have roller coasters and stuff. But this amusement park is different. It’s designed for gamers.
Esports have joined the big leagues, Goldman Sachs analysts wrote in a recent report
about the new subsection of the video game industry. China aside, the
esports industry already has a larger audience than Major League
Baseball.
Goldman estimates the monthly size of competitive esports gamers, 167
million as of year-end 2018, will hit 276 million by 2022, basing their
forecast on a NewZoo survey.
“China has been ahead of the curve on this; all of Asia really,†says
Menashe Kestenbaum, CEO of Enthusiast Gaming in Toronto. “If you see an
arena jam-packed with gamers, it’s probably somewhere in China or South
Korea,†he says.
Bill Coan, the CEO of ITEC Entertainment, the guys behind China’s
gamer theme park now under construction in a “top secret location,†is
predicting the future of the gaming industry, driven in part by esports.
Picture arenas where gamers in bulky headphones are playing video games
on large, concert-size screens against some of the best players in the
world (who will have the cooler headphones).
“If we are as successful at this as I think we will be, every city will want one,†he says.
Asia’s online population dwarfs other regions. It’s hard to compete
with 3 billion people between China and India alone. In China, they
watch gamers teach how to get to the next level in a shooting game or
compete head-to-head in teams on streaming content providers.
The esports NBA draft: Chiquita Evans poses for photographs with
Brendan Donohue after being selected as the 56th pick overall by the
Warriors Gaming Squad for the NBA’s 2K League on March 5, 2019, in New
York.
Frank Franklin II/ASSOCIATED PRESS
In the U.S., they do the same, watching gamers on YouTube and
Twitch. Some fans are not even gamers. Instead, they are watching it for
the personalities themselves, commenting on their game play.
Dan & Phil, two U.K. guys who play The Sims and make
videos of themselves playing it, have more views on a five-minute upload
to their YouTube channel than prime-time news programs on CNN, MSNBC
and Fox. (They’ve recently gone on a YouTube hiatus.)
For live streaming games in the U.S., Amazon’s seven-year-old Twitch.TV is No. 1.
According to Goldman Sachs, the total number of minutes spent
watching gamers play or discuss video games on Twitch rose 22% from 2016
to 2017 to 355 billion minutes.
Esports have long been popular in Asia. Now the North American market is growing at breakneck speeds. Newzoo projects that the North American region will have generated $335 million in industry revenue, and will account for over a third of global esports revenue.
“I know this is big. I left my regular career for this world,†says
Kestenbaum, 34, who considers himself more than just a gaming hobbyist.
“This is a whole new industry, a bit like the old video gaming industry,
but also more of an entertainment and advertising model like
traditional sports. That’s an emerging market.â€
EGLX BELL main stage on March 11, 2018 during the Counter-Strike: Global Offensive semifinals.
Enthusiast Gaming Image. Used by Permission.
Kestenbaum says he grew up in a family of rabbis. He studied and
later taught theology in Israel while moonlighting as the blogger
“Nintendo Enthusiast†back in 2001. Like everyone else in the business
of gaming content, he learned he had a Field of Dreams in his backyard.
If you built it around gaming in the early 2000s, the fans would come.
Four years ago, Kestenbaum built Enthusiast Gaming in Toronto with
around $4 million in seed capital. He built it on the idea that hobbyist
and lifestyle gamers were reaching a critical mass like traditional
sports. Enthusiast’s network of gaming websites, including the old
Nintendo Enthusiast and Daily Esports, have a combined 150 million
visitors each month, based on April Google Analytics. Monthly visitors
across the network was 2 million monthly visitors in 2015 and has
doubled since it went public in October 2018. In mid-May, Enthusiast
Gaming stock was up 171% since their IPO, beating the MSCI Canada.
In terms of page views and users in the gaming information category,
Enthusiast Gaming rose to the top 5 since going public, according to
Comscore.
All of this serves a testament to the growth in the video gaming industry. Some games (think Fortnite) easily have more revenue than TV and movies.
The model for companies like this is relatively straightforward:
exploit gaming by making it the new Hollywood, the new Disney World, and
the new major league sports wrapped in one. Jumble it all together, and
package it like you were packaging any other entertainment. Sort of
like being the ESPN, NBA and a team sponsor rolled all into one: the
distributor, the platform brand, and the gamer team. Within the
subsection of esports, companies sell tickets to events no different
than they would a concert. In the future, these games, in aggregate,
will earn as much or more than the Superbowl due to a global audience.
“The content consumption in esports is going grow; not only the
streaming of the gaming events themselves, but also the popularity of
the gamers and influencers is growing. They are celebrities and brand
ambassadors,†says Henri Holm, CEO, FandomSports. They launched a mobile
gaming app this month that bridges traditional sports with video game
sports, creating content around the two.
“There is the learning aspect of watching gamers on any given
platform or channel, and there is the entertainment aspect of it,†says
Holm. “It all rakes in so many eyeballs. And that changes the entire
advertising landscape. Advertisers will follow.â€
Esporting events account for around 9% of gaming companies revenue.
Media rights are another 14%. Most of the money comes from corporate
sponsors of events and online advertising. It’s the same model
worldwide.
Activision signed a two-year $90 million deal with Twitch to
distribute Overwatch League in North America. The Overwatch League is a
professional esports league for players of the video game Overwatch. Like traditional sports, it has permanent teams and regular season play for prize money.
As esports evolves, content providers will compete for gaming leagues
like traditional broadcasters compete for major sporting events.
Imagine, Fortnight championships only on an Enthusiast Gaming channel. That’s the game plan.
Investors are tuned in.
Esports companies like Cloud9, founded in 2013, have 27 venture
capital funds invested. The Santa Monica-based gaming company that
sponsors teams in League of Legends, Call of Duty and Counter-Strike
got $53.6 million in its latest Series B round, almost half
Enthusiast’s current market cap fully diluted right now at $130 million.
Kestenbaum did 12 acquisitions this year, including a $20 million purchase
in April of The Sims Resource (TSR), the largest Sims community in the
world. Worth noting, TSR is the largest female video gaming content site
in the world and is ranked on Quantcast’s Top 25 websites with the
highest concentration of female audience in the U.S., close behind
Oprah.com, according to the company. TSR gets 2.5 billion page views per year, based on Google Analytics.
“We rather create partnerships than build organically,†Kestenbaum
says. “Alibaba and Tencent want to do this here. And with the China
trade war they may be more apt to do something with us in Canada than
with the U.S.,†he says, adding that most of their content traffic comes
from the U.S. They also have offices in Los Angeles.
Alibaba has partnered with Enthusiast at their gamer event EGLX in Toronto. The event is named after their ticker symbol.
Last year, Alibaba ran a tournament for various games at EGLX.
Players from different countries competed against each other in games
including Counter-Strike and Dota, a capture-the-flag type of team esport that’s big in China.
EGLX is growing, though it has nothing to do with the Chinese.
It’s gamers. Hobby gamers and lifestyle gamers, who Kestenbaum refers
to as “the mother lode†for companies in the space, are everywhere
today.
In 2016, EGLX sold around 12,000 tickets. Last year they hit 55,000
attendees. The event is one-part expo with gamers in cosplay visiting
booths, testing games and buying merchandise, and one-part competitive
video game arena. Youtubers with large online followings play against
fans. Mitch Marner, a Toronto Maple Leafs hockey player, played a
competitive round of Fortnite for charity.
Kestenbaum presents NHL player Mitch Marner with a check for his
Fortnite charity match against a gamer from Chai Lifeline, a nonprofit
working with cancer patients. Destructoid’s mascot and the Kinda Funny
Games team look on.
Enthusiast Gaming. Used by Permission.
Their esports matches had combined payouts of $100,000, and were held
in a 100,000-square-foot room. When they do this again in October,
Enthusiast says it will need 200,000 square feet because there was not
enough room last time.
Enthusiast is running a rookie gamer program called Rising Stars. Think American Idol for big-dream video gamer fanatics. If lucky, lifestyle players might get a sponsor.
“There is a lot of content you can create around that scenario alone,†Kestenbaum says.
Holm’s from FandomSports agrees. Last year they found a soccer super
fan in Joinville, Brazil. “We flew him from Brazil to St. Petersburgh in
Russia to watch Brazil play Costa Rica. For us, it was a content
cost. We made him a star and put his journey on our website and Youtube
channel. Brands love to be a part of that.â€
It’s a fantasy world. But it’s easier to become a virtual athlete
than a real one. Universities from the U.S. to China are getting in on
the act. They’re teaching students how to manage events, how to play
games. It all sounds ridiculous, but many schools said the same about
ice hockey and soccer a hundred years ago.
Video game teams have a fan base just like the New York Yankees have
fans. Those teams earn real money. The Fortnite Tournament Prize pool is
$100 million. Yes, teams have to practice.
Individual gamers are the new celebrity.
Not a rock concert. Overwatch gamer fans watch a competition at a packed Barclays Arena in July 2018. (AP Photo/Mary Altaffer)
ASSOCIATED PRESS
Ninja, an online personality who live-streams himself playing video
games on Twitch and was a part of Luminosity Gaming, a Canadian esports
team backed by the owners of the Vancouver Canucks, makes around $1
million—per month, according to eSportsearnings.com.
Dota—a game whose artistry alone would impress the world’s
best graphic novel illustrator—paid out $25.5 million at the
International Dota 2 at Rogers Arena in Vancouver last August. This
year’s International Dota 2 Championship is going to the Mercedes Benz
Arena in Shanghai in August.
To put the Dota prize money into perspective, it pays twice that of Wimbledon and The Masters PGA golf tournaments.
Goldman Sachs forecasts esports audiences to reach 194 million this
year. Next year will be bigger. They have to watch those games
somewhere, physically and online. “I wouldn’t be surprised if you see an
esports arena at Disney someday,†says Coan from ITEC.
How long before Disney or Universal buy the rights to the Super Mario Brothers?
The U.S. and Canada are the largest esports market, with revenues of
$409.1 million, according to NewZoo’s 2019 Global Esports Market
Report.
China is bringing up the rear. The Chinese market for esports will
generate an estimated $210 million this year, overtaking Western Europe
to come in second place after North America.
“It all stems from the lifestyle gamer,†says Kestenbaum. “They’re
the type of gamer who consumes content about video games the way someone
in the market checks Bloomberg. They go to events. They pay to meet and
play with celebrity gamers. Gaming is no longer only about game
publishers selling a gaming app or a console game for Nintendo,†he
says. “There are cultures around these things. You can be Twitch and
provide a platform and watch people play and talk about your favorite
game,†he says.
Yes, Dan and Phil have taken their Sims gaming enthusiasm to
a live studio audience at arenas in the U.S. They were in Providence,
Rhode Island, at the Dunkin Donuts Center late last year.
Kestenbaum sums it all up for investors: “The opportunities here are absolutely enormous.â€
For media or event bookings related to Brazil, Russia, India or China, contact Forbes directly or find me on Twitter at @BRICBreaker
Posted by AGORACOM-JC
at 10:54 AM on Monday, June 3rd, 2019
Canadian pot edibles, topicals market worth $2.7B: Deloitte
Armina Ligaya, The Canadian Press
Canadian market for next-generation cannabis products is worth an estimated $2.7 billion annually, with edibles contributing more than half, according to a new report from Deloitte.
TORONTO — The Canadian market for next-generation cannabis products is worth an estimated $2.7 billion annually, with edibles contributing more than half, according to a new report from Deloitte.
This spending once the final edible pot regulations roll out in the
coming months is expected to be on top of the roughly $6-billion
estimated domestic market for recreational and medical cannabis, the
consultancy said Monday.
Consumers are looking to snap up these new pot products in addition
to the dried flower, oils, plants and seeds they have been buying from
legal retailers since legalization last fall, a recent survey of 2,000
Canadians conducted by Deloitte suggests.
The first wave of legalization last October was quite limited in
terms of product range and the type of consumer, said Jennifer Lee,
Deloitte Canada’s cannabis national leader.
“When we legalize in October again for edibles, we are in a world
where the formats and the assortment is much broader,” she said. “The
use cases are much broader.”
Canada is gearing up to legalize cannabis-infused foods, beverages,
topicals and other next-generation products in the coming months, once
Ottawa rolls out the final regulations.
Pot companies, as well as food and beverage makers, have been
preparing to roll out their own pot-infused products which they
anticipate will appeal to a broader audience — particularly those who
aren’t interested in smoking weed.
The federal government wrapped up its consultation on the draft
edible rules in February, and has said the regulations must be brought
into force no later than Oct. 17, 2019.
Deloitte estimates that roughly $1.6 billion will be spent on edibles
in Canada, followed by cannabis-infused beverages at $529 million and
topicals at $174 million. Spending on concentrates is expected to hit
$140 million, followed by tinctures at $116 million and capsules at $114
million.
Roughly half of likely edible users surveyed by Deloitte say they
plan to consume gummy bears, cookies, brownies or chocolate at least
every three months.
The global market for alternative cannabis products is expected to
nearly double over the next five years, the consultancy added.
Lee doesn’t expect these new products to eat into revenues from existing categories in Canada, at least in the early days.
“Over time, in the long term, you may,” she said. “But right now,
there’s too much demand in the market and there’s not enough product.”
Legal pot retailers, both government and privately owned, have been
contending with a shortage of cannabis since legalization last October,
but have said the situation has improved in recent months.
For example, the Alberta government lifted its moratorium on new cannabis retail licences, citing an increase in the pot supply.
Deloitte’s market estimates for cannabis 2.0 products reflect overall
Canadian consumer demand, but realizing the market’s full potential too
may take some time. Many of the new pot products may not be available,
or available in sufficient quality, come October, Deloitte said.
Companies should take a three- to five-year view on the market, said Lee.
“The regulations will need time to settle, even after legalization in October,” she said.
While this presents a growth opportunity for companies readying
themselves for the next wave of the green rush, it may come at the
expense of sales in more established industries.
“Our research is showing that the occasions that consumers use the
product, i.e. mostly edibles, overlap a lot with alcohol … On a
limited wallet, there are going to be tradeoffs,” Lee said.
As well, consumers view topical cannabis products such as lotions
used for ailments such as pain as a potential replacement for other
medicinal products, Deloitte’s survey showed.
“This could be cause for concern for the traditional pharmaceutical
sector, as 45 per cent of current consumers and 48 per cent of likely
consumers say they see cannabis topicals as an alternative to
prescription medications, not a complement,” Deloitte said in the
report.
Deloitte surveyed 2,000 adult Canadians online between Feb. 26 and March 11.
According to the polling industry’s generally accepted standards,
online surveys cannot be assigned a margin of error because they do not
randomly sample the population.
Cannabis Canada is BNN Bloomberg’s in-depth
series exploring the stunning formation of the entirely new – and
controversial – Canadian recreational marijuana industry. Read more from
the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day.
