Following last week’s big yet long-awaited news of the intended merger between higher education giants Cengage and McGraw-Hill, this week has started with a more surprising announcement that Wiley is acquiring Knewton, for an undisclosed sum.

11 year old Knewton has been a prominent player in the edtech space, raising more than $180m of venture funding.  Recently the company has pivoted to combining its adaptive technology with OER in the Alta platform, with courses costing $39.95 or alternatively $9.95 per month.  This platform addresses the fundamental needs of outcomes and affordability in education, according to Brian Napack, CEO of Wiley and Chief Knerd Brian Kibby.

“Driving outcomes at an affordable price”

This is good news for students and further evidence that the higher education publishing industry is clearly transforming to providing affordable solutions, with lower priced subscription models.  In so doing this also offers a path to transformation and growth for the industry, through digital offerings and new business models.

Presumably Wiley could have licensed the technology from Knewton.  Likewise, Knewton could have operated more freely as an independent company in disrupting the market. Presumably the two parties concluded they can either move faster, or operate at a lower cost, or get a higher mutual commitment, or realise a more attractive financial profile by means of an acquisition rather than a partnership.  This does look like a win-win for the two companies.

In the meantime, all key industry players in higher education publishing have access to good adaptive technology, some in-house (such as McGraw-Hill) and some licensed (such as Wiley pre-transaction).  This move bolsters Wiley’s in-house capabilities. It’s interesting to note that Pearson, who was an investor in Knewton, decided to phase out their technology two years ago.

Both transactions, Cengage-McGraw-Hill and Wiley-Knewton, are good news for students looking for affordable outcomes, and positive steps in the transformation of the higher education publishing industry.  In my view, the broader scope of the unlimited subscription that can be offered by Cengage-McGraw-Hill, coupled with the funding potential that can be untapped through their cost synergy program, would suggest that that transaction has the higher transformative potential to the market of the two deals.  It will be fascinating to track adoptions and usage of the various subscription models and the learner outcomes enabled by those platforms in the coming years to see what’s really working for the learner.

Good luck to Wiley and Knewton in making a success of this deal!