Even if you haven’t taken one, you’ve likely heard of MOOCs by now. These awkwardly named massive open online courses have revolutionized education by providing free, accessible courses online.
Many universities are now offering such courses through sites like Coursera, edX, Udemy and Udacity, and through their own portals.
This year, the number of universities offering MOOCs has doubled to cross 400 universities, and resulting in a doubling of the number of cumulative courses, to 2400. 22 of the top 25 US universities in US News World Report rankings are now offering courses online for free.
Source: Online Courses Raise Their Game: A Review of MOOC Stats and Trends in 2014, Class Central
However, developing a quality MOOC platform is cost intensive, and in the early days most MOOC start-ups were not very clear about their revenue generation models.
But according to a new report from Technavio, the revenue model for MOOCs is shifting to a more sustainable approach. Presently, most of the revenue in the global MOOC market is generated via education add-ons like course certification, exams, and personalized students services.
While these are nominal fees for individual students, they certainly add up. Globally, the MOOC market was valued at $1.13 billion in 2014. This number is expected to grow to $7.69 billion by 2019, as more MOOC providers figure out how to generate revenue while still offering education for free.
Global MOOCs market by enrollee age 2014
Source: Technavio, 2015
Our analysts have identified seven ways that MOOCs are expected to generate revenue through the forecast period:
Platform licensing
Licensing MOOC platforms is one of the most common ways of generating revenue. MOOC provider edX has allowed educational institutions to license its platform, allowing it to collect the first $50,000 per course and $10,000 per recurring course. Coursera has also partnered with several universities to generate revenue through licensing.
Course design and consulting
Custom-made courses are another method providers use to monetize their offerings. edX, the largest not-for-profit MOOC, acts as a consultant and course designer for universities that pay for the service.
Certifications
Coursera generated approximately $1 million in revenue from certifications in 2013. The organization offers several certified courses and specializations that give students a certificate upon completion. The fee is relatively small (about $25 per course), which means that students can complete an entire certification for less money than a single enrolled class at a university.
Paid examination
Paid examinations are one of the most popular revenue models for MOOC providers. Courses are for free, but students are charged for the final exam to receive college credit.
Global MOOCs market course preference 2014
Source: Technavio, 2015
Employer-sponsored courses
Corporations are using MOOCs to provide specialized training for their employees. MOOC providers can develop platforms for companies and receive sponsorship in return, or even receive sponsorship for an existing course. For example, Google provided HTML5 game development training via Udacity, to create more trained professionals in the area of game development.
Personalized student profiles
Some MOOCs charge students to create personalized profiles that link their profiles with coursework and certification for each course they’ve taken. This service provides a secure, verified location for students to maintain their electronic course records for future reference.
Paid courses
Paid courses are another way for MOOCs to generate revenue. The fees are typically low (for instance San Jose State University offers three courses in collaboration with Udacity, for about $150 per course) when compared with regular university courses, but still enough to provide a viable revenue stream for MOOC providers.
