Major MOOC provider edX acquired by online program manager 2U

Global edtech player 2U – a for-profit company that helps universities and colleges to adapt and deliver their programmes online – has acquired major MOOC platform edX for US$800 million. The two companies now have a combined portfolio of more than 3,500 offerings from 230 top universities and corporations.

edX was founded as a non-profit enterprise a decade ago by Harvard President Larry Bacow and MIT President Rafael Reif. Its compelling premise was offering users all over the world the ability to access a Harvard or MIT class – for free.

While it has remained a prominent MOOC platform, edX has struggled to compete with platforms such as Coursera in recent years. All MOOC platforms have faced challenges in finding a balance between an altruistic mission of expanding access to affordable education and the reality of needing to generate sufficient operational revenues, and all now offer for-fee study options as well as free courses. In 2018, edX began to monetise some parts of its offerings, including a requirement that students pay for verified certification after completing their courses.

While experts are divided on whether the deal will expand market share and profits for 2U, most agree that the development signals increasing investment in online programme delivery, a trend ushered in by the pandemic and the resulting movement of students online – whether students liked it or not. There is little doubt that going forward, universities will be offering many of their programmes at least partly online, both to offset risk in the event of another catastrophe and to expand their reach into other countries.

Sean Gallagher, founder and executive director of Northeastern University’s Center for the Future of Higher Education and Talent Strategy, told leading edtech news source Edsurge that,

“The deal is a sign that the once-distinct lines between MOOCs, online degree programmes and on-campus programs have blurred. For me, the big story here is this continued consolidation of market leadership in online learning. Scale matters, and the big are getting bigger.”

Both commercial and non-profit mandates

Edsurge called the acquisition a “surprise end” to edX because of edX’s non-profit orientation; 2U is squarely a commercial enterprise. MIT President Rafael explained in an open letter that being a non-profit was becoming increasingly unsustainable for edX in part because of the effects of the pandemic:

“COVID drove an explosion in remote learning, which spurred huge investments into edX’s commercial competitors. This put edX, as a nonprofit, at a financial disadvantage. This new path recognizes this reality and offers a solution that allows edX to continue to support and maintain the key aspects of its mission.”

2U’s acquisition of edX will allow it to access edX’s 39 million users all over the world and promote the degree programmes and other credentials offered by 2U's university partners to this global user base. This will be a commercial enterprise, and 2U’s bet is that this new audience will allow it to reduce the cost of acquiring students for its programmes.

Meanwhile, edX founders Harvard and MIT will use the assets from the sale to manage a new, as-yet-unnamed non-profit to continue to develop the open-source online learning platform they created a decade ago.

Presidents Bacow and Reif added,

“Today’s announcement will carry forward this mission on a whole new scale, connecting many more learners with a wider range of high-quality options for content, credentials, and degrees. With online education rapidly changing, it’s the right moment for this leap of evolution for edX.” 

That the presidents’ statement includes mention of “credentials” is worth a special note: when edX was founded in 2012, the focus was on providing courses linked to degree programmes. Over the past couple of years, students have shown increasing demand for shorter programmes such as micro-credentials and diplomas. Employer recognition of these mini-programmes has also been growing, and formal qualification frameworks are also beginning to make more space for alternative credentials.

The online marketplace is changing

Some industry experts believe that the combination of 2U and edX operations represents a new level of competition for the world’s online learners, and that the acquisition poses a threat to Coursera. Others argue that edX has sold out as a result of combining forces with profit-motivated 2U, and that Coursera will actually gain an ideological edge among colleges and learners. As Class Central’s Dhawal Shaw notes, even though many courses on leading MOOCs are longer free, most remain affordable compared to what students would pay for on-campus courses at a leading university. By contrast, “2U’s online degrees … are often just as expensive as their on-campus counterparts.” Mr Shaw believes the edX user base is mostly incompatible with 2U’s pricing, saying “the high cost of 2U programmes make them inaccessible to most of the world.”

2U’s gamble is that they can convert enough EdX users to more expensive courses to make the cost of their acquisition worthwhile and to allow them to scale in a way they couldn’t have otherwise. Whether or not it pays off, there is little doubt that the global audience for fee-based online courses has surged. More acquisitions and mergers are to be expected as a result, and the traditional model of universities offering exclusively in-person instruction may soon be history.

For additional background, please see:

• “New study highlights the expanding landscape of microcredentials”
• “What about the 20 million students who didn’t study abroad last year?”
• “Coursera filing provides insights into revenue drivers for online learning”