OPM Market Landscape and Dynamics: Fall 2020 updates

Last year I gave an update on our latest descriptions of the Online Program Management (OPM) market based on an webinar provided in collaboration with WCET. As part of the webinar I released two updated graphics of the OPM landscape, taking a broader view of this growing but dynamic market.

Fall 2020 OPM Market Landscape

Since last year’s version, there have been several changes made to the Landscape graphic.

• The readability and formatting of corporate acquisitions has been improved.
• Grand Canyon Education acquired Orbis Education.
• Zovio signed an agreement with the University of Arizona that will create a new “For-Profit Conversion.”
• I raised the category of “For-Profit Conversions” in the chart, given its rising importance and given the large revenues involved. Each of these show the nonprofit spinoff institutions (e.g. Purdue Global) in parentheses, although the OPM providers are now targeting additional customers.
• I have re-ordered the “Smaller Customer Base” category to represent market activity in more general terms.
• Given Georgia Tech’s switch from Udacity as an OPM and platform provider to using internal services and Canvas as the LMS, I have removed Udacity from the “MOOC Providers” category.
• I have adjusted the sampling of fee-for-service vendors based on market activity.

As before, please note that this view is intended to give a visual overview of the market landscape and is not comprehensive in terms of vendors represented. This is particularly true as you approach the bottom of the graphic.

Update 10/28: Grand Canyon acquired Orbis, not Bisk. The bullet point above and graphic below have been fixed. I apologize for that mistake.

Fall 2020 OPM Market Dynamics

There has been growing interest in the OPM market, as more schools try to develop a strategy and revenue model for online programs (particularly for master’s level). In addition, there has been a broad question to what degree schools would turn to OPM partners to help out with the Covid-driven move to online education in 2020 and beyond. We’re in the middle of the chaotic period of the pandemic, so there are no clear answers yet, but the consistent message is that OPM vendors are seeing a marked increase in interest from colleges and universities this year.

Typically the description of the OPM market is that the total annual revenue is somewhere between $2.5 – $4.0 billion and that it is growing. The implications are that we have a land grab as companies get rich off the new programs. The reality, however, is more complicated. The OPM market may be growing – and even accelerating during the pandemic – but it is chaotic and messy. Consider the following problems within the market:

• This is not an easy market, as many programs take millions of dollars of investment by the OPM provider before an account becomes profitable, often 3 – 5 years down the road.
• 2U’s Semester Online initiative, targeted at the undergrad market as a consortium, shut down in 2014 due to the departure of several founding member institutions and due to low enrollment.
• Later that same year Cal State Online shut down in all but name, along with its usage of Pearson as its OPM partner.
• In 2015 Synergis Education pulled out of its work with USC’s Master of Integrated Design, Business and Technology program, to be eventually replaced by 2U. Since that time Synergis has emerged with a stronger focus on medical programs and more of a niche strategy.
• In 2016 the University of Florida Online (UF Online) canceled its contract with Pearson and pivoted to a new approach not using an OPM partner.
• After raising $230 million from Bertelsmann in 2015, HotChalk has failed to bring in any new clients of the scale of Concordia University, and early this year Concordia announced it would shut down all operations.
• Sometime in 2016/17, the nonprofit OPM Educators Serving Educators from Excelsior College shut down.
• In 2017 after a management shake-up, DeVry Education Group (now Adtalem) pulled out of the OPM market and got rid of its Integrated Education Solutions group.
• In late 2017 the Eastern Michigan University’s chapter of the American Association of University Professors filed a complaint against EMU’s contract with Academic Partnerships, although an arbitrator sided with the school last year.
• Also in late 2017 Greenwood Hall – a call center-based fee-for-service OPM provider – collapsed in dramatic fashion, with AnswerNet eventually buying the remaining assets.
• There has been growing pushback on the mainline revenue-sharing model, where full-service OPM providers make 50% or even more of tuition dollars from online programs. Leading this charge has been The Century Foundation, although there appears to be an informal alliance of like-minded organizations lending support. This includes Noodle Partners.

The picture one gets is of a chaotic market that is not for the faint of heart, and one that will likely see further consolidations and category changes. All of this in a Mad Max-style pursuit of college online program revenue (whether rev share or fee-for-service or a blend, and whether degree- or certificate-based).

Market Naming

It’s also worth noting how 2U’s CEO Chip Paucek summarized their view of the market during yesterday’s earnings call:

Looking at the market landscape today the real challenge in opportunity for universities is not finding an online program manager to launch a degree — it’s finding a true digital transformation partner in order to better serve adult learners, who, at all stages and ages of life are searching for high-quality online education offerings differentiated by length or cost, certificate or degree stand-alone or stackable.

I think this view gets it right and is consistent with some other views from the market. In a joint article this year from Noodle Partner’s CEO John Katzman and Foundry College founder Stephen Kosslyn, they described a similar challenge for schools, although not directly addressing the OPM role.

A great deal of hard work needs to happen before the fall and through the next school year. Higher ed institutions that do this work successfully will be transformed for the better. They will have greater capacity with more flexibility; lower costs; and more engagement between students and faculty and among students. They will be both agile and durable, and on a road to further gains as technology continues to improve. Their students will be more connected to the real world—through, for example, semester-long internships anywhere on earth flanked by online classes—and more ready for their careers and lives.

In my webinar last year, I suggested the following definitions that align with those from Michael Feldstein.

• Online Program Management (OPM): Service providers who act as the primary partner to enable a higher education institution to create and / or deliver an online program; typically offering full-service, bundled offering
• Online Program Enablement (OPE): Service providers who act as the primary partner to enable a higher education institution to create and / or deliver an online or hybrid program; typically offering a significant subset of services
• Courseware, LMS, General EdTech, Technology Development & Integration: While important, these are not the same as OPM or OPE

What the pandemic is accelerating is the move by many OPM vendors into the broader OPE space. Call it digital transformation, call it OPE, call it OPX – it goes beyond purely online programs, beyond masters and professional programs, and it gets much more at the core of what colleges and universities are facing this year and beyond. We don’t have common definitions of this broader space yet – and for now I’ll keep the OPM naming for simplicity’s sake – but it is important to note.

Our landscape view of the market is temporal in nature – expect more shake ups and category changes as the OPM market continues to grow in new ways.