Educational books

Regulations are influencing the educational publishing sector’s shift towards more digital learning solutions. An improved experience for users and teachers is required for a step towards change.

Playing field

The playing field for the educational book market is changing. Recently ACM, the Dutch competition authority, gave conditional approval for the acquisition of Iddink by Sanoma Learning. As a result, the market now has a top three publisher of learning materials teamed up with a top two distributor of such methods and a supplier of learning management systems. Add on the November 2018 court decision stating that schools are allowed to order educational books and methods directly from publishers, and you can see that the traditional playing field is potentially facing a huge change.

At the same time, schools are continuing to use more and more digital educational material, and customised education is becoming increasingly important. Digitalisation will offer opportunities for new entrants, as well as the traditional publishers, to fulfil the customised needs of schools and students.

Educational books

What’s new?

Government spending on education has increased slightly year-on-year and is now approximately 5.5% of the country’s gross domestic product. With pupil numbers stable, growth in educational publishing revenues will have to come from a different mix within the total budget, or from growth in non-government spending. Digital publishing revenues was 19% of total revenues in 2018 and this percentage is set to increase further while total revenues remain broadly stable.

Schools are likely to change their purchasing behaviour to become more flexible and be able to customise learning methods to the needs of the student (giving a student the ability to follow a subject at different levels, for example, in secondary education). Carmel College, with 38,000 students was one of the first to test the waters. Besides changes to how schools acquire or rent educational books, the way in which schools organise their technology infrastructure is also changing. This is illustrated by the incorporation of SIVON, a collaboration which enables schools to leverage each other’s scale and knowledge in their journey to becoming more technology-enabled institutions.

As a result of these trends, digital revenues have started growing more quickly. Consequently, the different taxation rates between printed and digitally published content becomes more important. The European Commission has finalised its plan to change VAT regulations in the EU by replacing a positive list of products subject to low VAT tariffs with a negative list of products which should be subject to high VAT tariffs. This will eliminate the VAT difference between printed and non-printed learning material. From January 1, 2020, the VAT on e-books will be reduced to the lower VAT tariff of 9%. We believe that this change will drive the digitalisation of learning solutions even more. 

Source: PwC. Note: 1) Totals may not sum to 100%, because of rounding off. 2) Based on recent discussions across the industry, we learned that we understated the Digital publishing revenues and overstated the Print publishing revenues. This is reflected as of 2018. We did not restate historical numbers.

Educational books (€ millions)

Netherlands Historical data Forecast CAGR%
  2014
2015
2016
2017
2018
2019
2020
2021
2022
2019-23
Print 370 367 365 364 326 325 324 323 322 -0.4%
   y-o-y growth   -0.8% -0.5% -0.5% -10.3% -0.4% -0.3% -0.3% -0.4%  
Digital 19 24 29 35 77 81 86 91 96 5.7%
   y-o-y growth   28.2% 21.6% 20.3% 119.2% 6.2% 6.0% 5.8% 5.5%  
Total 389 391 394 399 403 406 410 414 418 0.9%
   y-o-y growth   0.6% 0.9% 1.1% 1.0% 0.9% 1.0% 0.9% 0.9%  

Source: PwC. Note: 1) Because we rounded off amounts and percentages throughout this Outlook, tables may not sum to 100%. 2) Based on recent discussions across the industry, we learned that we understated the Digital publishing revenues and overstated the Print publishing revenues. This is reflected as of 2018. We did not restate historical numbers.

Outlook

With infrastructure and privacy issues currently being resolved, investment in digitalisation in the educational publishing market is expected to increase over the next five years. Adaptive learning methods and other new approaches are a growing field of interest. Using artificial intelligence and machine learning to create enhanced personalised educational methods could help to improve pupils’ learning curves. 

Focusing on user experience is the main key to success. By continuously innovating the user experience of teachers and pupils, traditional educational publishers and new entrants can speed up the pace of digitalisation and its implementation in the educational system. Incorporating such techniques will allow both pupils and teachers to focus on key learning points, leading to better results. Having a platform which combines a learning management system, digital content and user experience for student and teachers may be a strong factor determining success in the future.

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Erik Boonen

Senior manager assurance, PwC Netherlands

Tel: +31 (0)612 524 825

Niño Santos

Manager, PwC Netherlands

Tel: +31 (0)88 792 40 64

Casper Scheffer

Partner, PwC Netherlands

Tel: +31 (0)88 792 65 20

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