Education

Minnie setback

Disney shutters its tutoring business in China

Disney-Shanghai-w

Parks yes, English lessons, no

Between 2012 to 2016, the market for English tutoring in China doubled to Rmb85 billion ($12 billion), says Frost & Sullivan, a market research firm. It is set to swell to Rmb240 billion in 2021. However, interest in studying in traditional classrooms has been hard hit by Covid-19, while the closing of China’s borders has led to shortages of native English teachers, which teaching centres often employ to justify higher fees.

A number of the tutoring businesses simply weren’t able to sustain their businesses.

One such company was Disney English, a subsidiary of the US giant. After arriving in the Chinese market in 2008, it filled an early niche in China’s private education sector, with lessons that were classroom-based, focusing on communication through singing, roleplay and interactive games. We last mentioned it during a dispute over intellectual property (IP) last March involving local education giant VIPKID (see WiC446).

But although Disney English emerged from that battle in reasonable shape, it has taken a fatal bodyblow from the coronavirus. On June 22, the company announced its closure, explaining that it was responding to changes in consumer preferences in which more students are moving towards learning online, “a trend which the global epidemic has exacerbated,” it said.

Alongside the news of the closures it guaranteed that tuition fees will be refunded before July 21, and that employees would be appropriately compensated too.

The news marks a rare reversal for Disney in China. Its education business targeted bigger, richer cities, and it was operating classrooms at the beginning of this year in Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu and Nanjing.

Aimed at children aged 2 to 12, its lessons cost about $20,000 a year for about 100 hours of instruction.

Then the pandemic stuck, forcing education companies to migrate to online instruction. Disney English tried to do the same in March but the switch was a struggle. Teachers had difficulty adapting to the new format; the style and content of the Disney curriculum didn’t transition well; and the user experience was deemed unsatisfactory.

Pan Pengkai, the founder and CEO of ed-tech firm ALO7, told Btime Finance that while Disney’s unit was one of the earliest English language tutors for children, it was already struggling to keep pace with the times. Pan says that parents now expect that tutoring companies must offer a suite of live broadcast classes alongside their more traditional lessons. The rise of other education platforms has also increased demand for accompanying learning tools online, integrated with WeChat and other forms of engagement on social media.

Other critics have argued that while Disney’s course content was once regarded as creative – its IP gave it the exclusive rights to deploy the likes of Mickey Mouse and the Little Mermaid in lessons – its material was not as suitable for helping children to get better scores at exams.

But what may have hastened the closure of Disney English in China was Disney’s dire second quarter results: earnings per share collapsed 91% on the same January-to-March period in 2019. With the parent company looking to make savings, the struggling Chinese education unit could no longer be subsidised. Other parts of the business are suffering heavily too. Its ‘Parks, Experiences and Products’ segment saw operating profit fall 58% year-on-year to $639 million.

At least Shanghai Disneyland reopened in mid-May – albeit at dramatically reduced capacity (see WiC495) – while its Hong Kong park welcomed guests back on June 18.

But against these brighter spots, the company says it has been forced to delay the reopening of its California Disneyland, where it had hoped to throw open the gates on July 17, because of the dramatic worsening of the Covid-19 outbreak in the same state.

The company’s website says it still plans to open its flagship Disney World on July 11, though the recent spread of the virus in Florida may lead to another postponement there too, depriving it of weeks of key summer tourism revenue.


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