The history of Megastudy and the current status of Megastudy

5월 14, 2014

The history of Megastudy and the current status of Megastudy

A Brief History of Megastudy

Megastudy is a private education institute founded on grounds of these unique backgrounds of South Korea. Son Ju Eun, the founder of Megastudy, started his career as a personal tutor in Gangnam. With success as a personal tutor, he established Megastudy with Jin Man Cho, who taught Korean in 2000. At embryonic period, Megastudy operated as compliments for off-line academy lectures. But with the e-learning environment growing and opportunities for achieving IT infra advantages, they invested more capital on the e-learning business. Through the recruiting of prominent teachers and developing familiar E-learning interface, Megastudy dominated the whole Korean on-line academy market.

Megastudy soon achieved a leadership in the Korean e-learning market right after they started their business. And they enlisted their firm at KOSDAQ in 2004. With the first-mover advantage, they dominated the e-learning market and once they ranked as 2^nd in the KOSDAQ total capital. While concentrating on high school off-line academy and elementary and middle school on-line academy, they enjoyed high profit from both regions and the stock prices which is summarized in Exhibit 1.

The reason for private education is partly due to the preparation for higher schools and prep education. And this private education partly harmed the public education because students concentrated more on private education for their prep-education and thus neglected public education because they didn`t teach higher level contents. This vicious cycle prolonged. To solve this public education problem, Korean government engaged in not only the e-learning market, but also off-line academy in 2007 on the basis not only to ‘Cutoff extra expenditures on private education but also to ‘Concentrate on public education’ and the results are as summarized in Exhibit 2 and Exhibit 3. To eliminate the vicious cycle in education-social class, the Korean government approached the education market in two ways. First, Korean government legislated on banning foreign and science high school entry exams and also linked 70% of KSAT with EBS lectures. Second, the Korean government vastly invested in EBS (Educational Broadcasting System). Contents for middle & high school students are totally free and the Korean government employed qualified-teachers for make EBS contents and the results summarized in Exhibit4.

With Korean government`s severe interference, Megastudy horizontally started their new business. Mega-Law School, which teaches LEET (Legal Education Eligibility Test), MEGA-MD which teaches MEET (Medical Education Eligibility Test), DEET (Dental Education Eligibility Test) and PEET (Pharmacy Education Eligibility Test) and MEGA-UT which teaches for college transfer. These three markets, which targeted adults, hit another success and 27.4%^{^[1]} of total sales in Megastudy result from these three businesses.

To continue their business, Megastudy expanded their business in China and Vietnam both in off-line and on-line market in 2010 and in 2012. However, they retreated from China in 2014 because of the Chinese government`s big limitation on allowing their students with foreign country`s education company. Furthermore, they faced hard time in Vietnam in dealing with their business. This failure greatly harmed the Megastudy’s business. And along with the Korean market`s harsh environment, Megastudy have experiencing a difficult period and this situation summarized in Exhibit 1.

What are the internal and external difficulties that Megastudy is facing now?

Megastudy has both internal and external difficulties and this is summarized in Figure 1 and Figure 2. In internal difficulties, they faced two weaknesses. Through first mover advantage, Megastudy fully exploited its advantage in e-learning contents making. But with technology improvement, many institutions also participated in this area and they also started to make their own off-line contents. As a result, Megastudy lost its status as an only e-learning contents making institution. Also, Megastudy faced difficulty in making new business. Their one way to making new business was expanding their institutions to China. But this failed and they faced ‘the next’ strategy.

Strength	Weakness
Diversified on-line & off-line institution and Qualified lecturers Strong cash flows Brand awareness	Undifferentiated contents Expansion in inefficient areas
Opportunity	Threat
IT infrastructure improvement Needs in education for whole ages	Political issues Strong Competitions (EBS, Daesung Institute)

Figure 1 SWOT Analysis of Megastudy

Political	Economic	Social	Technological	Environmental	Legal
Provide free contents through EBS	Rapidly changing market	Growing needs in education	IT infrastructure improvement	On-line industry helps to reduce carbon dioxide	Korean government`s regulation

Figure 2 PESTEL Analysis of Megastudy

In external difficulties, they faced two threats. First, government started to regulate this e-learning market explicitly and implicitly. Explicitly, Korean government intensified its own EBS to providing its contents free to all. Implicitly, Korean government regulated the off-line institutions and also they stated declare that 70% of KSAT problems will be linked with EBS. Second, there is strong competition among e-learning and off-line market. EBS, and Daesung Institute are their foremost competitors and Vitaedu, Etoos & Chungsol also followed.