Gaming company NetDragon is betting big on China’s US$64 billion online education market
- Fuzhou-based company acquired British firm Promethean for US$130 million in 2015 and US company Edmodo for US$137.5 million last year
- Plans to sell digital tool 101 Education PPT to students and parents in the future
For many, video games and books do not mix. But in the case of Chinese gaming company NetDragon Websoft, which is now dedicating more resources to its online education business, the opposite might be true.
“We want to provide quality shared educational resources … If you are not accepted into Tsinghua or Peking University [two of mainland China’s best educational institutions], does that mean you are not qualified to acquire the knowledge taught at these universities?” says Xiong Li, its chief executive, as he explains the rationale behind NetDragon’s push into online education.
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The online education sector is projected to hit 433 billion yuan (US$64.2 billion) by 2020, according to mainland China-based data mining and analysis company iiMedia Research. The sector is underpinned by the country’s education system, the largest in the world, and a culture that prioritises education.
Founded in 1999 by US-educated Liu Dejian, NetDragon is based in Fuzhou, in China’s south-eastern Fujian province. It also has offices in Hong Kong and California, and is best known for online games Eudemons and Heroes Evolved. In an industry dominated by Tencent Holdings and NetEase, it ranked 25th in terms of turnover last year.
NetDragon turned to the education market early, with the formation of subsidiary Huayu Education in 2010. Its flagship product in this sector is 101 Education PPT, a digital teaching tool that comes loaded with course resources, images and animations. It has been installed 2.3 million times in 31 provinces, according to the company’s 2018 interim report.
The company is currently selling 101 Education PPT to schools on a business-to-business basis, and plans to sell the tool to students and parents in the future.
NetDragon’s business plan can be viewed as a transition from hardware to software to a community platform, according to Philip Securities Group analyst Eurus Zhou. In a research note on the company, Zhou says: “We estimate that in the short run, hardware distribution will still serve as the cash cow. In the long run, developed software products will cultivate a social e-commerce platform, after absorbing enough users and building high customer loyalty.”