Competitor Pricing and Revenues Analysis
I have researched two competitors of STEMscopes: BrainPOP and Streaming Plus by Discovery Education. Among these two major competitors, over 50% of U.S. schools are using the services provided by Discovery Education (Discovery Education Streaming Plus, n.d.), and BrainPOP products are used in 25% of U.S. elementary and middle schools (BrainPOP, 2009). This represents an opportunity for STEMscopes in terms of disrupting current revenue channels.
Overview of Offerings & STEMscopes' Differentiators Influencing Pricing and Revenues
According to the above summary table of the competitor’s products:
In general, as the table above summarizes, the features that each product offers to students and educators include:
Pricing
B2C Teacher -- This model offers basic features for teachers, which is free for STEMscopes basic, but premium features are available at an additional charge which can be either a monthly rate or annual rate, though details were not available on the website. BrainPOP, on the other hand, offers a premium teacher monthly service for $220 / year. And Discovery Education, has minimum offerings for teachers at no cost. BrainPOP appears to be capitalizing on this B2C market, while STEMscopes and Discovery Education are not.
B2B School -- The pricing of each product offering differs. In STEMscopes there is a per student seat price at $5.25 to $5.95 versus BrainPOP and Discovery Education, which have annual subscriptions of $1,695 and $2,600 to $3,150 per year, respectively. In addition, STEMscopes has price points for its printed materials and hands on kits of $14.95 and $550 to $2,295, respectively. The key differentiator here is that BrainPOP and Discovery Education are focusing at the B2B level for monetization with user licences and related fees. STEMScopes, on the other hand, is basing pricing on the actual number of students who will be benefiting from the learning resources based on a per seat price, in this case, approximately $5.00, and likely decreasing based on scaling and realized economies of scale.
B2B District -- As for district licensing, the price range is based on a discounts of 10% to 30% off school pricing for BrainPOP and unknown for Discovery Education. However, STEMscopes pricing, while still based on student count, indicates via phone call that discounts on student-seat-price is offered for district-wide purchases.
I have researched two competitors of STEMscopes: BrainPOP and Streaming Plus by Discovery Education. Among these two major competitors, over 50% of U.S. schools are using the services provided by Discovery Education (Discovery Education Streaming Plus, n.d.), and BrainPOP products are used in 25% of U.S. elementary and middle schools (BrainPOP, 2009). This represents an opportunity for STEMscopes in terms of disrupting current revenue channels.
Overview of Offerings & STEMscopes' Differentiators Influencing Pricing and Revenues
According to the above summary table of the competitor’s products:
- Both BrainPOP and Discovery Education cover multiple subjects with various types of digital content that is suitable for K-12 students, and aligned to the Common Core State Standard (CCSS) and,
- Recently, have begun preparing for Next Generation Science Standards (NGSS).
- STEMscopes is focused on only STEM related topics, which in my opinion is a key and positive differentiator, because STEMscopes is already fully supportive of NGSS.
- STEMscopes further differentiates its offering by including digital books, tutorials, articles, hands-on kits and printed material.
- I regard printed material as old-century learning, and a significant cost centre with minimal, and cost intensive ability to scale. However, this is the only negative I view at this time with STEMscopes product offerings.
In general, as the table above summarizes, the features that each product offers to students and educators include:
- Concept maps or paths, lesson plans, assessment guides, and quizzes, however,
- Only STEMscopes offers hands-on kits and customization for state specific curricula, which will be critical as NGSS rolled out disparately throughout the U.S.A.
- In addition, STEMscopes delivers programming in English and Spanish, whereas BrainPop offers English, Spanish and French, while Discovery Education currently only offers English.
- For U.S. market relevance, English and Spanish are key so STEMscopes and BrainPOP hold an advantage in localized U.S. product relevance.
Pricing
B2C Teacher -- This model offers basic features for teachers, which is free for STEMscopes basic, but premium features are available at an additional charge which can be either a monthly rate or annual rate, though details were not available on the website. BrainPOP, on the other hand, offers a premium teacher monthly service for $220 / year. And Discovery Education, has minimum offerings for teachers at no cost. BrainPOP appears to be capitalizing on this B2C market, while STEMscopes and Discovery Education are not.
B2B School -- The pricing of each product offering differs. In STEMscopes there is a per student seat price at $5.25 to $5.95 versus BrainPOP and Discovery Education, which have annual subscriptions of $1,695 and $2,600 to $3,150 per year, respectively. In addition, STEMscopes has price points for its printed materials and hands on kits of $14.95 and $550 to $2,295, respectively. The key differentiator here is that BrainPOP and Discovery Education are focusing at the B2B level for monetization with user licences and related fees. STEMScopes, on the other hand, is basing pricing on the actual number of students who will be benefiting from the learning resources based on a per seat price, in this case, approximately $5.00, and likely decreasing based on scaling and realized economies of scale.
B2B District -- As for district licensing, the price range is based on a discounts of 10% to 30% off school pricing for BrainPOP and unknown for Discovery Education. However, STEMscopes pricing, while still based on student count, indicates via phone call that discounts on student-seat-price is offered for district-wide purchases.
While there are no distribution numbers, revenue summaries or other indicators of growth, I conclude that BrainPOP is a significant player within the broad online learning space. The company indicates their product is used in 25% of all U.S. and Canadian based schools in K-12.
Based on their pricing models, I conclude their revenues exceed $10 million annually. Worth noting is BrainPOP's strategic partnership with Samsung Electronics, which suggests either a preload on devices or other major bridge to accessing market (K-12 stuents/teachers/parents), and offers massively scalable distribution access.
What I assess as being innovative and market-credible with BrainPOP is summarized as follows:
Based on their pricing models, I conclude their revenues exceed $10 million annually. Worth noting is BrainPOP's strategic partnership with Samsung Electronics, which suggests either a preload on devices or other major bridge to accessing market (K-12 stuents/teachers/parents), and offers massively scalable distribution access.
What I assess as being innovative and market-credible with BrainPOP is summarized as follows:
- Strategic partnership with major blue-chip company
- In parent-co, FWD Media, Inc., there is also another entity named GameUp. With a focus on K-12 curricula and a game based education company, BrainPOP is well positioned to continue its expansion into U.S. classrooms with 21st century learning resources.
- Established in 1999, represents early market entrance.
Discovery Education, is a wholly owned subsidiary of parent company, Discovery Communications, which currently has a market capitalization of approximately U.S. $8.57 billion as of February 9, 2018. As the chart below depicts, Discovery Communications shares have been devalued in market, with a precipitous drop in overall Market Cap over the last four years.
From CSIdata.com, retrieved on February 9, 2018
Discovery Education, as a wholly owned subsidiary of Discovery Communications, has historical revenues of between US$6 million per quarter to US$8 million. Discovery Education, though having access to capital through its parent company, does not appear to have experienced significant growth over the last several years. Based on market capitalization of $8.57 billion, it is clear this subsidiary is a small aspect of overall Discovery Communications operations. Finally, an indicator that the Discovery Education division is not primed for growth is based on my assessment of their revenues. The last reported quarterly revenues are $36M (see above chart, which includes Education plus 'other'), and only represents 2.31% of overall parent-co. revenues. "Other", generally, includes non-recurring revenues (i.e. one time), so not scalable revenues. Given the Company's statement that its K-12 resources are in 50% of American classrooms, the $36M in revenues posted for the quarter seems quite underwhelming and a further indicator that high growth opportunities are not being pursued.
While there is no financial data available for STEMscopes, the website lists they serve 4,000,000 students (or another number from Business Wire -- 6,000 schools in 35 states), and based on their pricing model, this would suggest revenues of approximately U.S. $20,000,000 per year ($5/student/year), assuming 4,000,000 students represent current user base versus cumulative.
Summary Thoughts:
Overall, the pricing structures vary significantly for both B2C and B2B models, however, the value of STEMscopes pricing model is that it is student number dependent versus flat-rate. Based on preliminary market insights, many schools prefer to pay on a fee-per-student basis, particularly for schools with smaller student populations. The differentiated pricing structure is unique, and to date, has allowed STEMscopes to issue 4,000,000 student seats, realizing with over 50,000,000 students in the USA, there is a significant opportunity for future growth. Finally, worth noting, but beyond the scope of this analysis, the margin of profit on STEMscopes revenues is estimated to be larger than BrainPOPS or Discovery Education as in typical start-ups, the administration and cost of goods sold are lower due to 'lean start-up' mode.
Overall, the pricing structures vary significantly for both B2C and B2B models, however, the value of STEMscopes pricing model is that it is student number dependent versus flat-rate. Based on preliminary market insights, many schools prefer to pay on a fee-per-student basis, particularly for schools with smaller student populations. The differentiated pricing structure is unique, and to date, has allowed STEMscopes to issue 4,000,000 student seats, realizing with over 50,000,000 students in the USA, there is a significant opportunity for future growth. Finally, worth noting, but beyond the scope of this analysis, the margin of profit on STEMscopes revenues is estimated to be larger than BrainPOPS or Discovery Education as in typical start-ups, the administration and cost of goods sold are lower due to 'lean start-up' mode.