2014: Wall Street To Further Erode TBI’s Market Share

With 2013 coming to a close, it might be a good time to take out the crystal ball and ask what the future holds for the TEFL industry in Indonesia in 2014. While anything is possible, a few signs are emerging of the shape of things to come. Wall Street have announced that they are going to open 3 more schools in 2014, including 1 on TBI’s home turf of Bandung, which shows that they are going  from strength to strength. In contrast, TBI is going nowhere with no new franchise schools sold since 2010, three years ago, and 2 closed in the meantime- TBI Cengkareng and TBI Semarang. In short, they have lost all forward momentum and are going nowhere fast. Wall Street has stolen the “premium” mantle for Jakarta and TBI’s star is now rapidly fading. We expect them to be left even further behind in 2014, with TBI finally being seriously challenged in their one remaining stronghold- their home town of Bandung.

Wall Street Indonesia arrived in Indonesia just over 5 years ago and have thoroughly outclassed and outgunned TBI at every turn. They now have 6 schools in the greater Jakarta area with between 8000 and 9000 students. This is more than 4 times the number of students that TBI had in Jakarta as of early 2012 and Wall Street also charges more than twice as much as TBI. Therefore, it is probably the case that WSI already gets 8 times as much revenue as TBI from their Jakarta operations. This is despite the fact that TBI had a 15 year head-start on Wall Street. In reality, TBI’s real rival in Jakarta now is the likes of Direct English and Rumah Bahasa- smaller, low-tech bit players in the market who are fighting it out for 4th and 5th place.

Having decimated TBI in Jakarta, WSI is wisely now positioning itself to take over TBI’s one remaining stronghold: Bandung. According to recent pronouncements, WSI intends to open  3 new schools in 2014, including one on TBI’s home-ground of Bandung. They will open in Paris Von Java Mall, a top-end premises, which will reinforce to TEFL customers that WSI is a cashed-up operator with serious capital behind them. Indonesian customers will readily see that unlike TBI, whose miniscule marketing budget goes to a few cheap pamphlets, WSI is not afraid to invest real money in the success of their business. TBI faces losing its position as market leader even in Bandung, delivering another blow to their waning fortunes.

Why do we say WSI could overtake TBI within a single year? WSI has so far managed to enrol an average of around 1200 -1300 students per school. We assume that they will maintain this impressive record when they open in Bandung in 2014. Considering that TBI Dago and Riau have traditionally had around 800-1000 students each (many of them kids from public schools paying a pittance to get one hour of classes a week), we can easily imagine that they have much less than 2000 fully-fee-paying students at all times. (Also their classes in Bandung are often 90% Indonesian teacher and only 10% Native Speaker component, which means TBI charge much less in Bandung than most Jakarta schools.) It is not unrealistic to assume that a single WSI Bandung school will get more revenue than Dago and Riau combined, based on WSI’s much higher price point (usually more than double what TBI students pay). It is entirely possible than TBI will no longer be the market leader even in Bandung by the end of 2014. They really are going backwards fast now.

Their market share is also being eroded by other players. Bad as they are, Rumah Bahasa (for instance) have opened 2 branches in Jakarta while TBI have opened no new Jakarta schools in the past 7 years. Direct English will be opening a new school in Malang in 2014, further reducing their market share there too. In short, not only are TBI being decimated by Wall Street Indonesia, they find their customers being siphoned off even by lesser operators like Rumah Bahasa, Direct English and even (dare I say it) The Boston Institute. They are increasingly look like another also-ran player in the market.

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