Digital Content Providers Ride Wave of Rising Revenues

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Digital instructional content remains the largest slice of the growing educational technology market pie, with an estimated $3.3 billion in annual sales in the United States, even amid a challenging economic climate for K-12 districts.

“At times when things are difficult, the focus turns back to the classroom,” said John Richards, the president of Newton, Mass.-based Consulting Services for Education. “It’s not a time when you want to invest in infrastructure completely or go back and fix your finance programs. It’s really a time when you’ve got to pay attention to the fundamentals and see what you can do that will help teachers.”

Mr. Richards is one of the authors of “2013 U.S. Education Technology Market: PreK-12,” an annual overview of how districts are spending on nonhardware technology commissioned by the Washington-based Software & Information Industry Association. The most recent study covers the 2011-12 school year, when districts across the country were still suffering heavily from a weak national economy, the drying up of federal stimulus funds, and cuts to other pots of federal money previously used to support school technology purchases.

Overall, the study found, digital content represents about 42 percent of the nonhardware ed-tech market, up from 36 percent in 2010-11. English/language arts remains far and away the largest category, although the biggest year-over-year gains have been in science and “other” content, such as fine arts, business, or health.

On the district side of the equation, experts say, the push for digital content is being driven by the need for instructional materials aligned to the new Common Core State Standards and related assessments; changes in state policy and legislation that are encouraging—and in some cases mandating—a move away from traditional print textbooks; and the growing prevalence of digital devices in classrooms as the result of 1-to-1 computing and “bring your own device” programs.

Among vendors, meanwhile, the demand for digital content is causing “industrywide friction,” said Geoff Fletcher, the deputy executive director of the nonprofit State Educational Technology Directors Association, based in Glen Burnie, Md.

“There’s a push for more flexibility in content, but that’s conflicting with the [traditional publishing] business model that’s been out there for 50 years,” Mr. Fletcher said. “I think it’s a tremendous opportunity for school districts to begin to think differently about how they get and use content.”

Supporting Existing Curricula

The experience of Glen Rose Intermediate School in Texas’ 1,650-student Glen Rose Independent School District sheds some light on the changing dynamics of the K-12 digital content market.

To provide more “21st-century learning” opportunities for students, Principal Laurin Mapes initiated a push during the 2012-13 school year to begin using Time to Know, a new “complete digital teaching platform” from publishing giant McGraw-Hill Education, based in New York City. The product comes with new mathematics and English/language arts content in grades 4 and 5, but does not entirely replace either the print textbooks or digital instructional materials already in use at Glen Rose.

Instead, Time to Know provides a variety of lessons, readings, and content tailored to a wide range of student skill levels, all integrated into a software system that allows teachers to issue differentiated lessons and assignments, but still work with their whole classroom on the same general type of content.

Digital content providers represent the largest segment of the ed-tech market, with English/language arts being the biggest revenue producer within that segment, according to extrapolated data from the Software & Information Industry Association.

“What we’ve purchased is not completely new software or curriculum, but something that supports our existing curriculum,” Ms. Mapes said. “If a teacher is working on fractions, that’s what everyone is doing, but you can have some students above, below, and on grade level” at the same time.

Scott Drossos, the senior vice president for digital partnerships for McGraw-Hill Education, said Time to Know—with its emphasis on accessibility via mobile devices, personalized instruction to students, and real-time feedback to teachers—"really represents the future for us.”

“We’re really focused on wanting to help school systems make the transition to digital successfully,” Mr. Drossos said. “You don’t get a book with Time to Know—you’re working in a 100 percent digital realm.”

Other large digital content vendors are taking similar approaches. In March, New York City-based Amplify staged a high-profile launch of its new all-digital English/language arts curriculum for middle grades. The product makes extensive use of multimedia and learning games and is powered by an adaptive-software engine that tailors content for each student.

And New York City- and London-based Pearson has been touting its Common Core System of Courses, another digital-first product intended to meet states’ and districts’ appetite for new content in new formats.

But while the big players are “retrenching,” Mr. Richards of Consulting Services for Education said, they face big challenges.

“The shift to digital really goes against a lot of the sales history and relationships they’ve had,” he said. “It’s not just developing new content, it’s figuring out how to sell the content.”

Content Chunks in Demand

Major publishers are also facing growing competition from startups and providers of free open education resources, or OER, many of which are tapping into educators’ desire for more flexible, modular instructional materials, said Mr. Fletcher of the state technology-directors association.

“More and more of the people I talk to are expressing clearly the desire for more of an ‘iTunes approach’ to content,” he said. For districts, that means looking to access smaller chunks of content from a greater diversity of sources—or even focusing on producing their own content.

Mr. Fletcher pointed to the example of Arizona’s 12,000-student Vail district, which has its own Beyond Textbooks program through which digital curricular and support materials and other digital instructional materials are developed in-house and made available online for free to all faculty members—and, now, to more than 9,000 teachers in 88 Arizona districts and charters, according to the Vail district website.

Other states—including Florida, Indiana, and Texas—have also granted schools more flexibility in spending money traditionally allotted for textbooks on technology instead.

Mr. Fletcher said all that new energy is prompting some forward-thinking district officials to reconsider long-established purchasing practices—a trend that will likely be amplified by the ongoing influx of digital devices into classrooms and the continued need to find common-core-aligned instructional materials.

“Opportunities are beginning to open up,” he said, “and it’s an exciting time in the market because of that.”

Benjamin Herold

Contributing Writer, Education Week

Benjamin Herold was a contributing writer who covered learning environments and ed-tech issues for Education Week, and a contributing writer for EdWeek Market Brief.

Coverage of entrepreneurship and innovation in education and school design is supported in part by a grant from the Carnegie Corporation of New York. Education Week retains sole editorial control over the content of this coverage.
A version of this article appeared in the June 11, 2014 edition of Education Week as Digital-Content Providers Expanding Their Reach