Netflix model may become a win-win triumph for India's online learning apps

On a summer morning two years ago, 127,000 Indian teenagers logged on to the internet for a test-prep session run by Physics Wallah, an edutech platform that coaches aspirants for gruelling engineering and medical school entrance exams, according to Deccan Herald reports.

This was the largest live lecture the platform had ever conducted, though its regular classes also attract 50,000 students. The Physics Wallah app has 2 million daily users, each spending an average of 80 minutes on the platform.

It charges an average customer $50 a year, a third less than the cost of a two-device Netflix subscription in India. In 2022, Physics Wallah received its first institutional fundraise of $100 million from WestBridge Capital and GSV Ventures, propelling it to a unicorn status with a valuation of $1.1 billion.

Meanwhile, Byju's, another Indian edutech startup, began to crumble as schools reopened post-pandemic, leading to a decline in its K-12 business. With creditors of an unpaid $1.2 billion loan attempting to drag it into bankruptcy, Byju's founder Raveendran has lined up a rights issue at a pre-money valuation of $25 million. Investors like Prosus NV and Peak XV are furious as two years ago, Byju's was worth $22 billion.

They and other backers, owning 30 per cent, believe that the startup's only chance of survival lies in ejecting its founder and are seeking to put the proposal to a shareholder vote. The swift rise of Indian edutech coincided with a drying up of opportunities in China due to regulatory clampdowns.

However, online education is still a viable proposition in India, particularly in the test-prep market. Physics Wallah's founder Alakh Pandey, a YouTube sensation with 11.6 million followers, and his co-founder Prateek Maheshwari are capitalising on this demand. Post fundraise, they set up a campus in Kota, a city in Rajasthan known as a hub of test prep.

They now offer courses for 35 Indian exam categories and are opening one new offline centre every five days. Their annual sales have more than doubled in one year to 20 billion rupees ($240 million). The future of edutech in India, however, remains uncertain with the government announcing new guidelines for the industry.