With annual revenue exceeding 1.2 billion yuan and a total of over 400 million students, why did Tencent Classroom close?

Why did Tencent Classroom, a subsidiary of Tencent Enterprise, announce its closure recently? This article will show you the reasons, and this article is recommended for companies or individual business owners to read.

Internet giants including Tencent, Alibaba, and ByteDance have been adjusting their business strategies in the past two years. On the one hand, they have become more cautious about launching new projects, and rarely use the high-profile approach of spending huge amounts of money and resources as before; on the other hand, for various projects launched in the past under the route of massive expansion, as long as they meet two points: 1. They are not closely related to the main business; 2. They are not profitable, then, they are likely to be shut down directly.

Recently, Tencent Classroom, an online vocational education platform under Tencent, issued an announcement:

Tencent Classroom will stop providing access to all online courses starting August 1, 2024. Users will not be able to access new course content, but can continue to watch the free history course content in the [Course Schedule]. Tencent Classroom will cease operations on October 1, 2024, when all platform services will be completely stopped. Thank you all users for your support and companionship over the years.

Tencent Classroom Announcement

It is reported that the Tencent Classroom App has been removed from all major Android mobile app stores and the Apple App Store. Qimai data shows that the last update of the iOS version of Tencent Classroom was on May 22, 2023, more than a year ago. Guo Jing's observation of the Internet circle found that the last update of its official account and video account was in February 2023.

With no updates to the App and new media for such a long time, it is obviously only a matter of time before Tencent Classroom is shut down.

Currently, only the web version is still running .

However, Tencent was very good this time. Before the Tencent Classroom App was shut down, it offered all courses for free to everyone. It covers various fields such as IT Internet, civil service examinations and job hunting, design creation, postgraduate entrance examinations, language study abroad, etc. There are more than 800 courses in total. Among them, the most popular free video course has 1 million cumulative registrations. More common courses such as EXCEL, CAD, JAVA architect, PS tutorials, etc. can also be found and watched for free.

Tencent Classroom was founded in 2014 and has a history of 10 years. According to data, Tencent Classroom has served more than 400 million students at its peak, and the number of courses on the platform has exceeded 300,000. In 2020, Tencent Classroom announced that the annual number of visiting users exceeded 190 million, and 125 institutions had an annual revenue of more than 10 million yuan. From this, it can be inferred that the cumulative revenue of these large institutions alone on the Tencent Classroom platform in 2020 reached 1.25 billion yuan.

Tencent Classroom's success is largely due to Tencent's heavy investment. As early as 2019, Tencent announced that it would launch the "101 Plan" and invest 1 billion yuan in resources including traffic, curriculum system, and marketing services. In 2021, Tencent Classroom launched the "Ride the Wind Plan", and 13 content creators received 100 million traffic rewards.

Tencent Classroom is a typical high-profile game played by Internet giants in the past, spending money and resources to quickly occupy the top position in the market, and then exhausting other small and medium-sized platforms to reap the benefits. But what was unexpected was that after a long time, it was Tencent Classroom that took the initiative to shut down.

The closure of Tencent Classroom is related to several factors:

1. The vocational education market is large but fragmented, making it difficult to achieve a large scale effect

China's vocational education market is very diverse and complex. Basically, there are various vocational education and training institutions in every place. Some institutions may be very small, but they can still make money.

According to the 2023 financial report of Chuanzhi Education, the total revenue was 534 million yuan, and the net profit attributable to shareholders of the listed company was 15.6298 million yuan. Neusoft Education's revenue in 2023 was 1.806 billion yuan, and the adjusted net profit was 429 million yuan. According to the 2023 annual performance report of China Oriental Education, the total revenue was 3.979 billion yuan, and the adjusted net profit was 281 million yuan.

In addition to the above three major vocational education and training institutions, there are a variety of large and small vocational education and training institutions scattered across the country. This makes it difficult for one platform to dominate the market and it is difficult to form a larger scale effect.

2. Disadvantages of Online Vocational Education

Online vocational education is part of the vocational education market, among which a large part of the vocational education market is taken up by various offline vocational education institutions, leaving not many opportunities for online.

Tencent Classroom itself does not produce content, it only acts as a platform provider, attracting knowledge creators and institutions to join, and then providing corresponding course services to users . Tencent Classroom's approach is still the typical "lightweight" approach of the Internet industry. If it produces content itself, the entire operating cost will rise sharply, but the platform does not require huge manpower, material and financial resources, and Tencent itself has many resources that can be used directly.

Therefore, Tencent Classroom can only choose to operate online, and the online + platform model means that it is difficult for Tencent Classroom to really get involved.

3. Unable to break through the bottleneck

If we only talk about online, Tencent Classroom is definitely the leader in the online vocational education industry, but the leader also faces survival problems, that is, how to make money. Tencent is just a platform provider. When the courses on the platform have been completely expanded to the limit and the user scale has also reached its peak, Tencent Classroom needs to break through the bottleneck. This bottleneck is profit and net profit. If the settlement is made in this way, the situation of Tencent Classroom will be very embarrassing.

In fact, other Internet giants have also tried the field of online vocational education. For example, Baidu launched Baidu Chuanke (acquired by Baidu in 2014). However, by March 2020, Baidu Chuanke had announced its closure. Tencent Classroom was closed nearly 4 years later than Baidu Chuanke.

IV. Contribution to Tencent

Many people have a blind worship of Internet giants, believing that their products will look "scary", but in fact, the products of giants, like those of startups, will also face survival problems. Qimai data shows that a product called "Happy Learning Goose" under Tencent was removed from the App Store after only one day on the App Store (later integrated into Penguin Tutoring), and the "Penguin Speed ​​​​Calculation" App was removed from the App Store on the same day it was launched.

Today's big Internet companies are more concerned about the output ratio, how much contribution they can make to the group, and how much revenue and net profit they can contribute. This is the key point.

Tencent's support for Tencent Classroom is considerable, and its user base is not small, but when you calculate the revenue and net profit, it is completely disproportionate to the investment. This means that for Tencent, which has an annual revenue of 609.015 billion yuan and a net profit of 115.216 billion yuan, the value of Tencent Classroom is limited, and it is only a matter of time before it is shut down .

Of course, the closure of Tencent Classroom is also related to the entire vocational education market. If people could achieve a reversal of status through continuing education in the early years, then many opportunities now no longer exist, and the "magic" related to vocational education has lost its effect. For Tencent, the closure of Tencent Classroom is also a timely stop loss, and this kind of practice is very common in the Internet industry.

The Internet industry is magical. When it charges you, you may think it is cutting leeks, but when it is free, it is still very tempting to take advantage of it. Tencent Classroom is quite honest in this respect.

Author: Guo Jing

WeChat public account: Guo Jing's Internet Circle (ID: 138560)