The End of Textbooks
Many considered the inception of the internet to represent the death of paper-based knowledge acquisition, and while this does seem inevitable, progress has been slow, and the offline publishing world continues to tear down forests for the sake of materials that must be regularly reprinted in their entirety to keep them up-to-date. While many of these books are paid for by institutions, students are rarely granted free access since the exorbitant cost of new editions is passed on in the form of course fees.
Paradigm shifts are never easy; convincing academic institutions to do away with libraries will likely take many more decades, but one thing has changed over the last few years that has removed a substantial barrier. In the USA, for example, ownership of smartphones has gone from 35% of the population in 2011 to almost 80% by the end of 2016.
This figure is still rising, but it already means something significant: access to digital information is now available to the vast majority of people in the country. In other words, very few people need libraries. Not only that, but gaining access to a smartphone or tablet (should the need arise) has never been cheaper. The era of the portable screen is firmly upon us, and many companies are already taking advantage of the leap forward.
Cloud Nine Education Group Ltd. (CSE: CNI) (“Cloud Nine”) launched a digital ESL curriculum in 2016 which provides an innovative English language course program for worldwide distribution. The course is accessed via smartphone or tablet and involves zero conventional books. This allows students to learn at their own pace wherever they happen to be, and provides a method by which teachers can track the progress of their learners to identify weak areas.
It should come as no surprise that English is the most commonly learned second language globally. The simple alphabet makes it the perfect language in which to conduct international business and science. In fact, the ESL market generates around $35bn every year, and the overwhelming majority of these courses obstinately continue to use conventional materials in the face of the digital cultural tsunami.
Cloud Nine charges a monthly license fee per user. Currently, this is around $10 per month in Latin America, but the company expects markets such as South Korea, Japan and Saudi Arabia to generate higher fees. Even so, Cloud Nine’s target is one million users by 2021, and the more conservative fee already in place would generate a healthy hundred million dollars of annual revenue.
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Progress has been strong for the company this year. The curriculum was rolled out to a summer school program at Stanstead College, a prestigious independent boarding school in Canada. Confirmation that the pioneering program meets the strict academic standards of a top school is an essential confidence marker in Cloud Nine’s ability to follow through on its aims.
Additionally, at the end of 2017, the company signed a reseller agreement with Magic Lantern Media Inc. The agreement will provide Cloud Nine with an established and highly respected platform through which the company can market its proprietary cloud-based digital ESL curriculum in Canada and internationally. Magic Lantern has strong contacts and affiliations with large organizations, specifically in the language training market, presenting significant opportunities to generate sales and cash flow for both entities.
The companies expect this to materialize before the end of 1Q18, but, personally, I feel that the trend of replacing books with screens is, while sad, completely unavoidable for a number of reasons and so high growth should be expected in this area sooner or later (probably sooner). We do not have limitless paper, nor can we waste limitless “outdated” textbooks, and we must get over our sentimental attachment to this format of information sharing. On the positive side, change leads to new growth, and new growth leads to new wealth.