Teikoku Databank Co., Ltd. “Language school” market 179.7 billion yen, recovery slow after coronavirus pandemic; reskilling and increase in overseas study will be the key to the future

[Teikoku Databank Co., Ltd.] “Language school” market 179.7 billion yen, slow recovery after coronavirus pandemic; reskilling and increase in overseas study are key to future
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Teikoku Data Bank Co., Ltd. Press release: September 30, 2024 “Language school” market 179.7 billion yen, recovery slow after coronavirus pandemic; reskilling and increase in overseas study are key to future “Language school” industry trend survey (2023)
photo by PIXTA Language schools have been used primarily for children’s lessons and to improve their skills for studying abroad. In Japan, awareness of “language learning” was increasing due to the lowering of the age group for foreign language education and the increase in the number of students wishing to study abroad. However, in 2020, the situation completely changed. The market has shrunk due to the coronavirus pandemic, which has made it difficult to provide face-to-face services. As the coronavirus pandemic begins to subside, restrictions on movement have been lifted, inbound consumption is expanding, and companies are restarting overseas business expansion. Language schools are increasingly shifting to online classes, which offer detailed course settings to accommodate diversifying purposes and flexible locations and times. Therefore, Teikoku Databank conducted a survey and analysis on the market size of “language schools.” This is the first time a similar survey has been conducted. “Language school” market in 2023 will be 179.7 billion yen, only about 90% of the peak in 2019 Approximately 60% of “language school companies” in 2023 will be profitable [Note 1] Target companies whose main business is the operation of “language schools” extracted from the database held by Teikoku Databank. Approximately 170 companies in 2023 [Note 2] Calculated based on corporate credit report (CCR) and other external information. Contains some estimates *Research institution: Teikoku Databank Co., Ltd. “Language school” market in 2023 will be 179.7 billion yen, only about 90% of the peak in 2019 The size of the “language school” market in fiscal 2023 was 179.7 billion yen, which is the total revenue of about 170 companies whose main business is the language school business. Since its peak in fiscal year 2019 (203.1 billion yen), the market size has remained at around 90% of its peak due to the coronavirus pandemic making it difficult to hold face-to-face classes and demand declining due to travel restrictions. There are many companies involved in this business, including those that do not operate language schools as their main business, and the number of companies has reached a plateau as it is difficult to secure the quality and number of instructors, and the barriers to entry are high.
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Post-coronavirus movements include the opening of corporate courses to meet the demand for reskilling, and the shift to online classes, making language schools with diverse styles that do not fit into the traditional “language classes as lessons” stand out. We are also seeing companies offering new added value, such as AI-based analysis, individual lessons with native instructors, and use in conjunction with learning apps and subscription services. Approximately 60% of “language school companies” in 2023 will be profitable An analysis of approximately 70 companies whose profits and losses for fiscal 2023 were revealed revealed that 58.2% were in the black, 34.3% were in the red, and 7.5% were at breakeven. Profitable companies have secured profits even during the coronavirus pandemic due to an increase in customers due to the retention of highly skilled personnel and reductions in operating costs associated with the transition to online classes.
https://prcdn.freetls.fastly.net/release_image/43465/939/43465-939-7b0ef9e887234129f3d0e2fe5ffd9f77-511×600.jpg On the other hand, loss-making companies suffered from soaring personnel and operational costs, were unable to absorb advertising costs, and faced intensified competition with peers, making it difficult to acquire instructors and customers, resulting in a decline in profitability. This survey revealed that the market size of “language schools”, which shrunk due to the coronavirus pandemic, is not recovering. The number of Japanese international students in 2023 was 64,421, which was 83% of the number in 2019 before the coronavirus pandemic (according to research by the Japan Overseas Study Abroad Council, which covers 40 study abroad companies that are JAOS members). This seems to be because demand for language learning remains sluggish as travel is curtailed due to the weak yen and high prices. In the future, there are concerns that the expansion of inexpensive learning apps and free social media sites will accelerate the decline in school users. On the other hand, starting in October of this year, the rate of education and training benefits paid by employment insurance will be raised from a maximum of 70% to 80% of the tuition fee. If generous public support leads to an increase in learning opportunities, including reskilling, the market size will likely recover to the same level as in 2019.
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