February 22, 2024

The total addressable market (TAM) is an important tool for businesses to estimate the effort, resources, and market opportunity for a product or service. It helps to create a smart business plan to produce a profit. In this article, we’re going to overlook this strategy and share market insights for one of the fastest-growing industries — EdTech.

What’s TAM?

The Total Addressable Market (TAM) or Total Available Market is defined as the complete income opportunity that a product or service can achieve if it captures 100% market share.

Strictly speaking, it represents a potential opportunity. You can use it to figure out how much money or resources a company should invest in a brand-new product. Above all, whether it’s worth investing in.

This concept is crucial for both startups and established firms, as it helps rank products and customer segments. Geographical location, business resources, capacity, regulatory restrictions, and competitor market size should be considered. To size TAM, you ought to examine trade associations, government reports, and research journals, and gather assessments from surveys and experts. Finally, there is a formula to run the numbers.

All in all, the total addressable market calculation can help you forecast revenue growth and analyze how profitable your business can be in that industry. Additionally, it can help you identify potential market gaps and areas for expansion. Using TAM you can make informed decisions about resource allocation and marketing strategies. Thus, maximize the success of your company.

TAM for EdTech

It goes without saying, EdTech is a real game-changer.

EdTech refers to hardware and software created to improve teacher-led learning in classrooms and raise students’ academic performance.

The usage of technology and virtual learning tools (audio, video, animations, multimedia, smart classroom technology) innovates the education process for both teachers and students.

In eLearning programs, Learning Management Systems (LMS) are used to aid in administration, documentation, tracking, and recording. They are available for both on-premises and cloud deployments.

Developed economies, such as the U.S., U.K., and Germany, are focusing on introducing cut EdTech solutions. They aim to support education administration, reduce teacher workload, and engage students and the community. The education industry is on the verge of a digital revolution, with advances in AI, robotics, and AR/VR expected to transform conventional teaching techniques.

The global EdTech and smart classrooms market grew from $140.2 billion in 2022 to $163 billion in 2023 at a compound annual growth rate (CAGR) of 16.2%. Moreover, they are expected to grow to $304.6 billion in 2027 at a CAGR of 16.9%.

By the way, EdTech is not only online learning but all digital products, hardware, tools, and services created for educational purposes. There is also a difference between educational products. Some directly target the learner (B2C: student or parent in the EdTech context). Others are B2B products, referring to EdTech – educational institutions. B2B currently makes up a larger share of the global market, at 54%, compared with the 46% occupied by B2C.

Important to mention K-12, which is the term used for education and educational technology in the United States, UK, Canada, and some other countries, and is short for public college preparatory school grades. These grades are Kindergarten (K) and Grades 1-12 (1-12). It led the market in 2022 because of the growing trend of game-based learning. Moreover, it’s expected to keep growing.

The K-12 Education Technology market is projected to reach $ 71.8 billion by 2028 from an estimated $ 18.8 billion in 2022, at a CAGR of 25.0% during 2023 and 2028 according to Valuates. It’s also forecasted to have the largest share of the market. Pankaj Agarwal, CEO, TagHive, predicts that the K-12 EdTech sector will see north of $5B in VC investments in 2023.

Regional Insights: Get Ready for Numbers

North America Is Leading

In 2022, North America dominated the market and produced the majority of global revenue. Over the next five years, it will account for 46% of the market’s growth. Solid infrastructure and the eager adoption of modern technologies by educational institutions and students will promote growth. As a result, local educational organizations will shift their focus from traditional EdTech systems toward online-based ones.

The US will remain North America’s key EdTech market. Experts noted a rising demand for programs that are tutoring- or quasi-tutoring-based in their analysis of American EdTech trends.

Products that help teachers differentiate instruction have gained popularity, as personalized attention for pupils has become a priority. These products support teachers in assessing students’ strengths and weaknesses and help them assign lessons, worksheets, and tasks. They also allow teachers and curricula creators to add their materials, which is useful for the authors of educational content. You may be interested to see the example.

EdTech is now able to report on student progress on a daily and weekly basis, which allows parents and teachers to intervene sooner. The project idea was to create a standard system for the authors of educational content.

Asia Pacific Is Keeping Up

Asia Pacific EdTech market is expected to witness substantial growth from 2022 to 2026 according to Global Data. China, India, and Japan grew at the fastest rate in the local EdTech market. Favorable government initiatives and a rise in venture capital funding from private investment firms are contributing to regional market expansion.

During the forecast period, increasing EdTech company consolidation in the Asia Pacific region will have a significant impact on industry growth. One recent example was online learning company Byju’s which surpassed fintech company Paytm to become India’s most valuable internet start-up.

Latin America, the Middle East & Africa Regions

From 2022 to 2028, the Latin America, the Middle East, and Africa Education Technology Market would expand at a CAGR of 17.6%. A smart classroom is advancing the EdTech industry by offering tech-savvy solutions to improve teaching and learning processes for tutors and students.

Education is a key goal of the governments in order to create a diverse, knowledge-based economy and reduce reliance on oil. As a result, this industry keeps expanding quickly. 16.3% of the $16 billion government budget for the country in 2022 went toward education. To strengthen the job market, the UAE has also created a “National Strategy for Higher Education 2030”. The UAE market would exhibit a CAGR of 17.3% during 2022 – 2028.

The Brazil market dominated the LAMEA Education Technology Market by Country in 2021 and would continue to be a dominant market till 2028; achieving a market value of $5 billion by 2028. The Argentina market is experiencing a CAGR of 18.2% during 2022 – 2028.

EU Tendencies

The Europe Education Technology Market would witness market growth of 15.3% CAGR during 2022-2028. In Europe, the highest number of internet users are in Germany and France. However, when it comes to the digital skills of the population, the most skilled countries in Europe are the Nordic and Baltic countries (Finland, Sweden, Denmark, Estonia, and Norway).

In 2021, the German market dominated the Europe Education Technology Market by Country. It would hold this position until 2028 when it would reach a market value of $19,4 billion. During that time, the France market would exhibit a CAGR of 16.1%. (2022 – 2028). The global EdTech market has a growing, middle-sized player in France. When compared to before the pandemic, this represents a significant growth.

The UK Overview

The UK market is anticipated to grow at a CAGR of 14.3% during this time. Approximately 583 million U.S. dollars were invested in EdTech in 2022.

The most frequently matched in the “school management” market segment are the terms associated with the delivery of learning and information management systems (LMS and IMS) and general solutions to support the assessment of students and track their progress.

Most of the firms providing hardware and devices to primary and secondary schools showed a tendency to supply interactive displays, whiteboards, or equipment. Companies in this segment also provide other technologies which can help enhance the learning experience of pupils at school such as VR and Robotics.

Conclusion

The EdTech market is expanding daily. Most importantly, it’s expected to grow to $304.6 billion by 2027. More and more companies use EdTech products for reducing the costs of employee training and making the education process faster. LMS and other EdTech software are used by schools and other educational institutions to speed up learning recovery and monitor their students.


Interesting Related Article: “The Future of Learning: Emerging Technologies in EdTech and their Implications 

Total Addressable Market (TAM) for EdTech: How Fast Is It Going to Grow? first appeared on Web and IT News.

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