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Pearson bets on direct subscription shifts to students

Pearson PLC update

Pearson, an educational publisher that has faced pressure over years of soaring college textbooks, today launched an app that gives U.S. students access to all 1,500 titles with a $ 14.99 / month subscription. I did.

The launch, which began with an announcement of a better-than-expected profit recovery in six months, marks the next step in a strategic shift under Andy Bird, who took over as CEO of Pearson last October. increase.

Bird described Pearson as an “institutionalized” company focused on selling to schools and colleges, and promised to turn it directly into a consumer brand.

Former Chairman of Walt Disney International hopes that the all-you-can-eat app will build relationships with students and establish Pearson as a dependable brand for lifelong learning from childhood to the workforce.

But after years of disappointment with digital investment, Pearson is skeptical about consumer appeal and competition with innovators as he attempts a painful transition to the subscription model in other sectors. Have to.

Pearson’s six-month results, released Friday, show early signs that Bird’s strategy is paying off, a significant recovery from last year. Headline sales increased 7% to £ 1.6bn and adjusted operating profit was recorded at £ 127m following a loss of £ 23m.

In a previous interview with Friday’s results, Bird likened Pearson’s consumer pivot to the transition to streaming content in the music and film industry, giving the platform deep insight into individual consumer preferences.

“Basically, we’re moving from ownership to an access model, just as the music industry is moving from ownership to Spotify and iTunes,” he told the Financial Times.

Disney once released a movie to an unrelated audience, he added: [streaming service] Disney + they know everyone who has seen Black widow And they start to make that relationship. ”

Users of the Pearson + mobile app can choose to pay $ 9.99 per month to access a single textbook for a minimum of four months, or $ 14.99 per month for the entire Pearson library.

Both prices represent a significant discount on the current list price of Pearson textbooks.Hardcover version of Campbell Biologyfor example, It is listed It sells for $ 223.99 on Pearson’s website.

Decades of rising prices in college textbooks have expanded the US teaching materials market to $ 3 billion, but have become more hostile to major publishers.Pearson was one of several accused of colluding to eliminate competition and raise prices under antitrust law last month. Proceedings Dismissed by a US judge.

Soaring prices have also sowed the thriving market for used textbooks, and innovators have sought to connect that demand to new products for students.

An early success in textbook rental services, Chegg now offers controversial student services, including answering course questions for $ 14.95 per month. Founded in 2005, it now has greater market value than the 177-year-old Pearson.

2017 Publisher Sengage We started a textbook library subscription for $ 69.99 per semester and $ 199.99 with the help of additional homework.

Bird is used by 10 million college students who use Pearson + apps each year to access Pearson + apps, just as streaming platforms have signed contracts to offer services such as Spotify and Netflix at no additional cost. He said he had a “very interesting” opportunity to bundle with his services.

We also hope to build relationships with student consumers by launching the app on US university campuses this fall. Student consumers return to Pearson while “re-skilling” and “upskilling” at work.

Citi analyst Thomas Singlehurst said the most obvious advantage of the app is building a customer base and digital storefront for these potentially much more lucrative lifelong learning products.

“They clearly tagged it [online course provider] Coursera is building these large databases of registered learners and further increasing their value, “he said.

But he remained cautious about Pearson’s ability to become Netflix in education. If the student needed only Pearson products, the plan might work, but he said it offended the reality that most of the material was prescribed by many publishers.

“The point of Netflix is ​​to provide tremendous value for a huge selection … It’s not the purpose of college textbooks. Each course requires a specific textbook.”

Some university admins are also skeptical of the model of giving privileged access to a single publisher.

Eddie Watson, vice president of education innovation at the American Colleges Association, said some instructors, including various publishers, support the open access model.

“Perhaps pressure from students with access contracts or subscriptions means that faculty are forced to look for textbooks that are not always optimal for the course,” he said. .. “The risk is to eliminate other options that may be more open and affordable.”

Pearson bets on direct subscription shifts to students

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