Are online short courses a revenue opportunity for UK universities?
The dire financial state of UK higher education is starkly evident across higher education institutions (HEIs). The number of UK HEIs cutting jobs is reportedly now over 50, and in some institutions, courses are being suspended and departments are closing down. The factors behind the financial crisis UK HE faces are well rehearsed. Income is decreasing due to the depreciation of undergraduate fees and a reduction in international student numbers, along with the higher fee income derived from them to subsidise activity.
These factors are driven by external forces, and it's easy to exclusively focus on outside factors as the sole cause of the challenges presented to UK higher education. There are, of course, very good reasons for that, but this should also be a time when UK higher education takes a look at itself. The world doesn’t stand still, and regardless of the nature of your organisation, regular change is needed to respond to changing contours.
One area that UK HEIs are reflecting upon is their portfolio of courses and programmes, and several are going through a process of “rationalising their portfolios.” I take this to mean a trimming of courses and programmes where the demand and intake is too low for them to be financially viable.
This is a complex area, and I certainly think if we look at higher education as a whole, portfolios should not be solely influenced by the financial viability of courses. However, that said, it would be naive to not admit that there are programmes running or that have been proposed that don’t have legs or are out of touch with the real world.
The main emphasis for portfolio rationalisation seems to be on the financial viability of subjects rather than the balance of types of courses/programmes. Or to put it another way, it seems to be all about degree portfolios.
This is interesting because if we think about course trends over recent decades in online education especially, the overarching trend is towards courses that are shorter. No one out there is saying what we really need is to add some more years to degree courses and make them longer. All the movement has been toward shorter courses and programmes.
The exclusive focus on degrees puts certain subjects under greater pressure, and I’m not sure whether any HEIs are exploring whether those subjects might be more viable as different types of courses that are smaller than degrees. Portfolio rationalisation of degrees is fundamentally different from a rationalisation that factors in a wider range of course and programme types.
A profitable revenue stream?
This all leads me to thinking about online short courses. The realm of courses that are essentially less than a degree is murky, with a lack of consensus on definitions and contested terms. The newer course type that garners the most hype is microcredentials, which arguably contributes more to this murkiness than providing clarity. However, when discussing online short courses, I'm mainly referring to standalone courses that are not credit-bearing and last weeks rather than months.
In January, the major consultancy firm PwC published a report titled the UK Higher Education Financial Sustainability Report, which included an intriguing and largely overlooked line. Under diversification of income streams, it stated:
“The provision of short study online courses can be a profitable revenue stream delivered virtually by universities.”
As far as I can ascertain, there's no justification for this statement in the report, making it difficult to assess, especially considering that some of these large multinational consultancies don't always have the best track record of guiding HEIs in the online education market. Nonetheless, this is an intriguing area to explore.
Learning lessons from MOOCs
One might argue that online short courses, under the banner of MOOCs, have been the product area witnessing the most significant growth in the last decade. According to Class Central, between 2012 and 2022, the number of MOOCs grew to around 20,000. These courses were delivered by approximately 950 HEIs internationally, with 220 million students signing up.
In the UK, over 50 HEIs have at some point offered MOOCs, primarily via online education platforms. Some HEIs have built extensive course portfolios, attracting millions of learners. However, as impressive as these numbers and growth trends may appear, the extent to which they translate into revenue growth for HEIs is highly debatable.
In fact I think if you were to look at MOOC activity from UK HEIs over the last 10 years through a strictly financial lens, it would largely appear as a loss-making endeavour, costing thousands of pounds. While there were benefits derived in various ways, in the majority of cases these weren’t financial.
I don’t believe that the performance of MOOCs should be the final word or ultimate judgment on the online short course market. This product movement was driven by hype and fuelled by private investment. It certainly validated the interest and appetite for short online courses from HEIs. However, the approach taken by many makes it difficult to gauge the revenue potential of short online courses from higher education MOOC activity.
Online short course activity under the banner of MOOCs often lacked any coherent strategy and, like other initiatives within universities, came with budgets that dwindled over time, receiving little scrutiny regarding whether expenditure was offset by income. Ultimately, the revenue potential of short online courses cannot be accurately measured in an environment lacking strategy or genuine concern for income generation. In many ways, I believe we can view the period from 2012 to 2024 as a missed opportunity for UK HEIs to develop their online short course portfolios in a manner that would yield multiple benefits, including revenue.
What remains clear, however, is that through the vast ecosystem of platforms, there exists a substantial number of online short courses and participants. This does not imply that HEIs can easily tap into this market, but it underscores a persistent demand for short online courses.
This is just one area that might fall under “other than degrees” when it comes to the education provision HEIs offer, worth exploring. In general, and considering their current situation, HEIs should be contemplating other types of education provision when assessing their portfolios.
Online CE and CPD growth and potential
Many UK HEIs already generate revenue from what is known as Continuing Education and Continuing Professional Development (CPD). These types of courses are offered to individual consumers, businesses, or non-commercial organisations. In 2022-23, UK HEIs reported a combined revenue of approximately £720 million from Continuing Education and Continuing Professional Development (CPD) courses.
Over 40% of this income is derived from CE and CPD courses for individuals, some of which are offered online. The top five HEIs in terms of income from this activity in 2022-23 were:
Kaplan Open Learning (Essex) Limited - £27.8 million
London School of Economics and Political Science (LSE) - £21.2 million
London Business School - £20 million
University of Edinburgh - £15.6 million
University of Oxford - £13 million
Almost all of the names on that list offer few surprises, as they are prestigious UK HEI brands. However, the top entry is somewhat unexpected. Kaplan Open Learning is an OPM partnered with a couple of UK universities, including the University of Essex. Unlike other OPMs, Kaplan Open Learning is registered with the Office for Students (OfS), and this entry relates to the University of Essex Online, as the brackets might suggest.
Having previously reported £0 income in 2021-22, it seems remarkable that what is essentially the University of Essex Online is now reporting the highest revenue of all UK HEIs for CPD and CE courses for individuals. That’s a significant and noteworthy revenue growth, which, without more granular detail, one might assume is from their suite of 12 online short courses. It appears there’s likely to be detail and depth missing here that would help more accurately interpret this amount.
However, looking at the other providers in the top 5, all of them offer online short courses to some extent. LSE has been offering online certificate courses through a partnership with the online education company GetSmarter (owned by 2U) since the mid-2010s and has grown their student numbers to over 10,000 in 2022/23. Similarly, the University of Edinburgh and University of Oxford have a notable number of online courses that would fall under the banner of CPD and CE courses, and although somewhat later to the party, the London Business School now offers a decent number of short online courses too.
A market worth some exploration
One conclusion to draw here is that there is indeed a market for online short courses, but it’s one that seems viable primarily for the big names in UK HE, whose brands lend value to courses lacking formal accreditation. That is certainly what many people have felt and there’s a lot in that, along with the fact that in a number of these cases private partnerships will have had a role to play in any commercial successes.
However, there's a sense in which, for many HEIs, online short courses offered under the banner of CE and CPD remain an underexplored area. Among the 200+ UK HEIs reporting income from CE and CPD courses for individuals in 2022/23, 20% reported no revenue, and 19% reported revenue of less than £100k.
When considering what some term the shadow education market - encompassing the diverse array of platforms, providers, small and large businesses offering short online courses falling under CE and CPD - and reflecting on UK HE’s involvement in that space, it seems clear that this area merits exploration.
As with degrees, it's easy to overstate the size of the opportunity here and for HEIs to underestimate the necessary work and capabilities required to capitalise on any existing market. However, just like online education as a whole, it strikes me that if HEIs are reviewing their portfolios then degrees, online or not, should not be the exclusive focus.
