Michael Hansen wants to turn his company into the Netflix of higher education.
The business he runs, Boston-based Cengage, is the No. 2 college textbook publisher, behind Pearson. Hansen is gunning for the top spot. And he’s taking a risk to do it by unveiling a subscription service, in time for next fall’s classes. Instead of watching “Orange is the New Black” or “Stranger Things,” students can binge on “Essentials of Criminal Justice” or “Digital Moviemaking.”
Hansen tells me this move is the most disruptive action the industry has seen in decades. Cengage subscriptions will essentially be $120 a semester, or $180 for the full year. Not as cheap as Netflix. But that still beats the $500-plus that most college students easily spend annually on their texts.
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Students who subscribe to Cengage Unlimited, as the service launched today is called, get full access to all the digital titles in Cengage’s catalog. Cengage wants to persuade more professors to use its materials, in part because they can now be offered in a new affordable option for students.
The private equity-owned publisher will continue to sell print versions of its books, of course. But that line of business easily could be cannibalized by Cengage Unlimited. Hansen hopes to make up for any losses in individual title sales by gaining more market share. (Higher ed titles represent about $950 million of Cengage’s $1.6 billion in annual revenue.)
Major industry-changing disruption often comes from young upstarts. But Hansen knows that the big, established players need to shake things up, too.