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DOI: 10.26794/2220-6469-2021-15-3-77-84
UDC 339.137(045)
JEL D40, I21
ab c
Lomonosov Moscow State University, Moscow, Russia
a https://orcid.org/0000-0001-7263-9282; b https://orcid.org/0000-0002-7483-1910;
c https://orcid.org/0000-0002-7233-1322
The coronavirus crisis has destroyed the well-established concept of the familiarity of life. One of the few areas that
showed stable growth during this period was the online education market, which proved to be an effective alternative
to ofine education. Using the online education market as an example, the authors study the concentration of online
educational projects, based on the theoretical concept of stratication by levels depending on institutional conditions,
the situation of the dominance of representatives of one level over another. As one of the main conclusions, the authors
highlight the absence of independent Alpha players due to the relatively small size of the market, the presence of unique
factors of dominance (IT, ecosystem, support from the state and venture capital companies) and the dependence of the
online education market on the expansion of external Alpha empires.
Keywords:online education market; economic dominance theory; institutional rent; Alpha empires
For citation:
Mir novoi ekonomiki The World of New Economy
CC BY 4.0
©
© Govorovaa А. V., Suslovab I. P., Shcholokovac S. V., 2021
World of New Economy • Vol. 15, No. 3’2021
The online education market has become
one of the few that have benefited from the
coronavirus pandemic— in this context, the
need for new distance education products and
technologies has increased enormouslyThis
market is still signicantly smaller than other
IT-markets and is relatively young, which can
ensure its steady growth in the medium term.
[1] In 2016, according to EdMarket research,1
the Russian online-education market was
estimated at 20.7 billion rub., representing
1.1% of the total education market; according
to the results of 2019, the volume of the
market was 38.5 billion rub., with an average
annual growth rate of 20%.[2] According to
RBK data, as of the Q3 of 2020 total revenue
of top-50 companies of the online education
market since the beginning of the year
amounted to more than 18 billion rub., and
at the end of 2020— about 34 billion rub.
(for the Russian market as a whole— 55–60
billion rub.).[3] This growth cannot but be
accompanied by significant structural and
institutional changes, and the purpose of the
article is to assess how deep transformations
of the online-education market are taking
place and can take place in the near future.
ONLINE
–
To date, leadership in all segments of the
online education market has been retained
by professionals who originally did so. The
growing interest of major players from
adjacent markets in launching their own
online educational services, platforms and
ecosystems cannot be ignored. It’s also worth
noting that since the second half of 2018,
people with no experience in any educational
activity, and not only online, are increasingly
entering the online education market. They
1 Study on the global and Russian online
learning market TalentTech, Нетология and
EdMarket.
mostly replicate existing successful models,
occupy underdeveloped niches and compete
with marketing budgets.
According to the analyst company HolonIQ,
as a result of the coronavirus crisis, the online-
education market attracted 8.3 billion dollars
in venture capital in the rst three quarters of
2020, setting a record in the sector all along.
[4] With regard to investment in Russian
online-education, according to EdMarket data,
total investment as of August 2019 amounted
to 34.5 million dollars. Investments in Russian
online education for 2017–2019 distributed by
segments as follows: 27%— school education,
20%— language education, 20%— additional
professional education, 11%— corporate
education, 22%— other.
Due to the large state presence in the pre-
school segment, the online-format is mainly
represented in supplementary education of
children only. However, it is worth noting that
according to the State Program of the Russian
Federation “Development of Education” for
2013–2020, the expansion of the role of the
non-State sector in the provision of pre-
school and supplementary education for
children has been established as one of the
areas of educational development. Experts
predict that the online share of this segment
will be 5.5% in 2021.
The situation is similar in general
secondary education. Despite the over-
conservative nature not only of the general
secondary education system, but also of
parents’ attitudes towards the online-
formats of general education, the situation
with coronavirus revealed the vulnerability
of the segment to the trend of digitization
of educational methods: according to expert
forecasts, the penetration of online format
into the general secondary education segment
in 2021 will reach 1.5% and supplementary
education for schoolchildren will reach 6.8%.
The situation in higher and secondary
vocational education is due to the lower
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participation of the State in this segment
[5]: EdMarket ofcial statistics for the school
year 2015/2016, 59,1% higher education
institutions— State universities, 40,9%—
private. The share of online training here is
projected by experts to be 4.4% in 2021. In
the area of additional professional education,
the online-format is more widely used than in
others, and experts predict that in 2021 it will
be 10.9%.
If you look at the distribution of Moscow
startups in education, according to EdMarket
data, the largest number of them in additional
professional education is 45% and school
education— 20%. However, since 2016, online-
market players are expected to expand into
the corporate sector, and according to experts,
this is becoming a strategically important
growth point for educational online-business.
The statistics provided are not only due to
the presence and participation of the State in
each of the segments, but also to sociological
factors— the capacity of the recipients of
educational content and their attitude to
online education. This was particularly evident
during the extreme transition to distance
learning in the context of the COVID-19
pandemic, which highlighted not only the
main problems of face-to-face education (low
quality of educational content and imbalance
in teaching burden), but also the disorganized
nature of the recipients of educational content
in time and space in remote setting. [6] Also,
the factors that determine loyalty to online-
education, can be considered involvement
of the educational level and organization in
the international community. For example,
according to the data of the all-Russian survey
of university teachers on the development
of a remote format, conducted by the Social
Research Laboratory of RANEPA, universities
integrated into the international community
Skillbox, 820, 185
SkyEng, 610, 38
Netology group, 600, 80
Geekbrains, 800, 150
Getcourse, 410, 86
Uchi.r u, 440, 92
iSpring, 380, 85
Like Center, 420, 298
Yandex.Workshop, 430,
1025
Webinar Group, 170, 100
Ykl ass, 90, 347
SkillFactory, 200, 310
IntellectoKids,75, 449
CORE, 60, 1233
Turbo preparation, 50, 233
Hello world,30, 1077
Kodland, 20, 575
0
200
400
600
800
1000
1200
1400
0 100 200 300 400 500 600 700 800 900
Growth Q3 .2020 to Q3 .2019
Revenue, million rub..
Fig.
Source: Complied by the authors based on data from the Talent Tech, Smart Ranking 2020. URL: https://trends.rbc.ru/trends/education/5fdbad
c69a7947b8cfb7d086.
A. V. Govorova, I. P. Suslova, S. V. Shcholokova
World of New Economy • Vol. 15, No. 3’2021
have a fairly high level of loyalty to a remote
format.
Economic dominance theory may be chosen as
a convenient tool for analysing institutional
change, proposed by A. A. Blochin [7] and
further developed jointly with I. V. Lomakin-
Rumyantsev and S. A. Naumov [8, 9]. It
describes how the trends of concentration of
business in the Russian economy led to its
stratication into three levels with different
institutional conditions and domination of the
upper levels (alpha-business) over the lower
levels (beta- and gamma-business).
The theory is partly a continuation of
François Perroux’s idea that market players
are inherently inequitable and interconnected
as enterprises expand and adopt new
technologies.[10]
Trends in the stratication of businesses by
different institutional levels are characteristic
of the entire Russian economy. Examples
include online-education.
Turn to Talent Tech, Smart Ranking for
2020 to identify and compare the main players
of online-education market in Russia. As a
base for analysis take companies that, along
with positive returns, showed growth in the
Q3 of 2020 compared to the Q3 of 2019 (see
gure).
Starting from the idea of economic
dominance theory, to describe the
segmentation of the online-education market,
it is necessary to identify the factors that
determine the differences in institutional
conditions. In order to solve this problem, we
will get acquainted with the stories of some
companies which have appeared in the top
rating and shown in the figure in the lower
right zone.
The Skillbox education platform was
launched in 2016. At the beginning of
2019 Mail.Ru Group acquired 3% of the
company, after a month increased the share
to 10.33%, and already at the end of 2019 it
had a controlling interest— 60,33%, which
according to the annual report of Mail.Ru
Group cost it 1,6 billion rub.
SkyEng Language School was founded in
2012, with an initial investment of 400 thous.
rub., then— 300 thous. dollars. In 2013, the
school also launched its own education
platform, which cost it 500 thous. dollars, in
2016— mobile application and TV series
language learning service. In 2017, SkyEng
entered the USA and Latin America markets
and opened two new areas of activity in Russia.
In 2018, the school is attracting investment
from Baring Vostok foundations, and since
then has been actively launching new services
and entering new markets.
Netology Group company was formed in
2014 by merging the project “Netology” and
the start-up “Foxford”. In the same year the
company became a resident of Skolkovo, and
venture fund of the InVenture Partners invests
in it in two rounds totalling 1.6 million dollars.
In 2015, the company received a 2.1 million
dollars additional investment from Buran
Venture Capital and InVenture Partners. In
2017, Buran Venture Capital and InVenture
Partners withdrew as shareholders of the
company, and 40% bought “Severgroups”.
The Getcourse platform started as an
educational project that needed investment,
and paid off only two years later, in 2017, when
the boom in educational online-project began.
Thus, the essence of institutional rents in
the online education market of the companies
represented in the gure can be expressed by
several factors:
1. Mergers and Acquisitions. Promising
projects and startups in the online-education
market are often bought in whole or in part by
major corporations, giving them additional
investment and access to donor-company
capabilities and resources.
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2. Platform. Unique educational platforms
attract investors and become a competitive,
often critical, advantage for users.
3. Support. Educational projects and
platforms in areas of strategic importance
to the State are supported by venture capital
investments.
ONLINE
The largest companies with a strong platform
solution and support from the state and/
or venture investors constitute the alpha
business group (inthe gure are located in the
lower right zone). They are characterized by
high revenues and stable growth rates. They
are well placed to further strengthen their
market position through organic development,
the absorption of smaller companies with
unique performance, the development of
product lines and the broadening of the
customer base.
The group “beta” are large companies
which either avoid direct competition with
the “alpha” or lose the market in the course
of the competition for customers. They also
have strong platform solutions, but attracting
investment is more expensive (inthe figure
clearly dene the location of the companies
of the group “beta” is problematic, among
them can be attributed to the companies of
the top left and a number of companies of the
lower left zone, except for the cluster area—
companies of the group “gamma”).
Gamma-companies are those that operate
in the market, replicating successful alpha-
and beta- company models. To survive in
this group, they have to work on a unique
proposal and customize the conditions (gure
on bottom left— low-income, low-growth
cluster).
B. A. Vertograd proposes to distinguish also
“alpha-empires”— combining of all three types
of companies (ortheir distribution among
influential alpha-leaders) into integrated
systems to obtain synergistic effects. [11]
Members of the alpha-empire may operate in
one ecosystem, on one technology platform
or within established codes and regulations, —
this will be their advantage over other market
participants (see gure).
In the Russian online-education market
there are three major alpha empires belonging
to Mail.Ru Group, Yandex and TalentTech.
For example, 6 companies ranked by Smart
Ranking are members of the alpha-empire
Mail.Ru Group, because they are wholly
(Geekbrains) or partly (Skillbox— 70%, Uchi.
ru— 25%, SkillFactory— 18%) owned by an
Internet-giant. [12] The listed companies
occupy signicant shares in certain segments
Table
SkillBox, Geekbrains, Uchi.
ru, SkillFactory, Tetricka,
Algorithmics Netology-group Yandex.Workshop SkyEng, Getcource, iSpring,
Maximum Education,
Webinar Group
Source: Complied by the authors based on data from ofcial companies’ websites.
A. V. Govorova, I. P. Suslova, S. V. Shcholokova
82
World of New Economy • Vol. 15, No. 3’2021
of the Russian online-education market,
which allowed them to be classified as beta-
level companies before joining the common
ecosystem. This alpha-empire also includes
gamma-rms: Tetricka and Algorithmics (Mail.
Ru Group owned 45% and 11.7% respectively),
occupying school niches in information
technology and programming.
The Yandex alpha-empire includes all
companies with the “Yandex” or “Y” console
as well as the School of Data Analysis, the
School of Managers and Flow. Most of
Yandex’s projects are more in the gamma level,
as they occupy separate niches of the online-
education market. For example, Flow— part
of a larger Y. Workshop— is a platform for
learning English.
TalentTech’s third alpha empire includes
Netology-groups, which includes an
online school to prepare for Primary State
Examination, Unied State Examination and
“Foxford” olympics, Netology— is a platform
of online-courses for adults, EdMarket
(distance learning) and “Digital education”.
Thus, it can be noted that IT-factor is
prevalent in the Russian market of online
education, since all alpha-empires are
controlled by IT-holding. Moreover, non-
alpha-empire players are also partners of
major companies in computer software
development (Maximum Education) or have
subsidiaries in this area (SkyEng). Due to
the high degree of influence of the sphere
of information technology— the companies
participating in the market of online-
education services have tendencies to
explosive growth and quickly move from one
level to another.
For companies at the “gamma” level
in the online-education market two
development scenarios are available: 1)
form a unique trade offer, attract “smart”
investments and escape into the segment
of “beta” or even join the alpha-empire
(through partnership or absorption); 2)
develop your customer base and settle for
the current level of earnings and profits,
staying forever in the group “gamma”.
The first development scenario, for
example, took advantage of the former
“gamma” SkillBox, attracting investment and
experience of Mail.ru, ensuring its explosive
growth. The second scenario was chosen by
Uniweb, beginning its history with universities
and providing online training programs. Over
time, the company has been able to develop
its product into a platform where machine
learning can provide the necessary courses to
train the company’s employees. By focusing
only on a specific segment, the company
avoids direct competition but cannot sustain
rapid growth.
Mirapolis on its platform enables HR-
services to manage the entire process of
human capital development, including
the implementation of online-learning.
Antiphishing focused on training people
to counteract digital attacks. The company
thus occupied a narrow niche, becoming the
only player in it, but it is the narrowness of
this niche that prevents the company from
leaving the gamma- segment. The goal of
the beta- and gamma-level companies may
well be to capitalize and invest, as well as
to sell to a major market player— “alpha”
or alpha-empire. It is not possible to track
such a strategy because of the opacity of the
market: there is little published information
on loss. For example, according to Interfax,
Coursera’s net loss in January-March 2021
was 21.1% of revenue, in the same period
26.6% of revenues were generated in 2020,
while in the Q1 of 2021 revenues increased
by 64% and registrations by 5 million.
Analysis of the online-education market in
Russia generally confirms the basic ideas of
the theory of economic dominance: market
segmentation exists, with alpha-leaders taking
83
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advantage of opportunities to access the less
expensive resources and infrastructure of
alpha-empires to gain dominant positions in
online-learning. For these reasons, market
forecasting needs to take into account the
institutional changes taking place in the
market.
The distinctive features of the online-
education market are:
• First, the dominance of either alpha-
empire units or companies integrated with
alpha-companies in other markets. This
may indicate that for small industry-sized
micro-vertical markets the emergence
of independent “alpha” is problematic or
impossible at all, since market size does not
allow for sufcient market power comparable
to the alpha-leaders of larger markets.
• Second, there is a near absence of beta-
players, which is generally not the case in
the education market (the use of economic
dominance theory is justied for the analysis
of the higher education market) [13].
• Third, the ability of gamma players in the
online-education market to develop depends
to a large extent on their relationships with
alpha-players and access to their institutional
resources. The market, however, is not as
definite as its relative youth, as well as
opportunities of entry of alpha-players from
other markets and development of “beta”
and “gamm” through integration with prole
“alpha”, including— from the venture market.
It is also interesting to highlight the
example of Mail.Ru, which is actually
represented on the market by several gamma-
and beta-satellites, each of which acts under
its own brand and competes with “related”
companies. It may be that this alpha-empire
approach, through the creation of several
competing units/projects, is optimal for fast-
growing new markets.
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Angelina V. Govorova— Engineer, Department of Economics of Innovation, Faculty
of Economics, Lomonosov Moscow State University, Moscow, Russia
angelinagovorova@yandex.ru
Irina P. Suslova— Engineer, Department of Management, Faculty of Economics,
Lomonosov Moscow State University, Moscow, Russia
suslovairena@gmail.com
Svetlana V. Shcholokova— Cand. Sci. (Econ.), Associate Professor, Department of
Management, Faculty of Economics, Lomonosov Moscow State University, Moscow,
Russia
shcholokova@gmail.com
Authors’ declared contributions:
A. V. Govorova— analysis of alpha empires.
I. P. Suslova— analysis of the online education market.
S. V. Shchelokova— analysis of alpha, beta, gamma companies.
The article was received on 12.06.2021; revised on 30.06.2021 and accepted for publication on 15.07.2021.
The authors read and approved the nal version of the manuscript.
A. V. Govorova, I. P. Suslova, S. V. Shcholokova