What if You Build It and They Don’t Come?

What if You Build It and They Don’t Come?

The MBA is perhaps the most visible, non-specialized post-graduate degree program and a staple of American graduate program offerings for generations.

At many institutions, MBA programs largely define their brands. For a variety of reasons, most business schools have been able to also utilize the programs as significant revenue engines, floating countless initiatives and investments throughout the institution. Like several other academic programs, when online delivery became normalized, schools with big MBA brands and profitable programs saw growth opportunities and realities.

By and large, the school leaders who opened online MBA programs, or invested in scaling and marketing them, were not wrong. Unconstrained by geography and less constrained by program size and the need for concurrency, times have been good. The biggest bumps in the road were solely macro trends, with no real governor on the growth of the online MBA in particular.

Fortunately, the enrollment impacts of the pandemic have now receded and enrollment, including MBA enrollment, has rebounded. The business cycle has also turned. According to our most recent in-depth report on MBA programs, hiring interest for MBA graduates is also up. Both are good news, especially for the MBA schools.

Unfortunately, our new report also unearthed a troubling trend for MBA program providers – despite increases in MBA enrollments, online MBA programs are shrinking.

As mentioned, we found that interest in MBA programs, as represented by online search habits, is up. So too is enrollment, up 1.6% year-over-year in 2024. The problem is that the number of online MBA programs is also up, and up too much to offset the overall enrollment growth. The MBA enrollment pie may be growing, in other words, but many more mouths are asking to eat than there used to be – the result, everyone’s portion is getting smaller. Encoura (formerly Eduventures) describes this as a decline in program productivity.

In 2018 there were 555 online MBA programs. By 2023, there were 732, with more coming into the market last year and more still planned for this year. This increase has driven the average size of per-program online MBA enrollments downward, from an average enrollment of 215 in 2018, to 182 in 2023, with per-program enrollments expected to shrink even more in coming years.

If you’re a school with a brand-new online MBA offering, 180 students may not be so bad. It’s better than the zero you had last year. But if your online MBA has been in the market for a few years, and you keep investing in marketing it, the decline is a real and present challenge.

The increase in the number of online MBA programs corresponds to a drop in confidence in these programs among school leaders. As covered in our report, the percentage of higher education institutional leaders indicating that they believe business programs are high-demand online programs, declined from 26% in 2019 to just 15% in 2024.

To compound problems, declining per-program enrollments have increased price pressures, as MBA providers seek ways to stand out in a crowded, competitive market. The falling prices cut margins, forcing schools to get fewer net dollars from the fewer students they do enroll. At the same time, competitive pressures also incentivize program marketing and recruitment investments, forcing schools to get more creative, more aggressive with their marketing budgets to compete. And although the alternative of not investing in marketing is probably far worse, the added expenditures increase existing and growing budget pressures. Bottom line, it’s a tough cycle in which to operate.

Online MBA providers can always hope to pull more enrollments from prospective students who express interest in on-campus MBA programs. That trend is going in the right direction if you’re on the online side of the ledger, as the share of online MBA students has outpaced on-campus ones and online offerings are expected to keep growing as a share of the overall figure.

But will that be enough, even if the overall enrollment numbers continue to grow modestly?  Maybe not. And it very likely will not be enough if overall enrollments stagnate or drop again, which could always happen.

Even if nothing happens and the trend just marches on, as we predict it will, shrinking per-program enrollments in online MBA programs will force some schools to make difficult decisions such as radically increasing their recruitment spending or changing the programs themselves to separate from the field.

Some may even consider merging or shuttering their online MBA because they cost real money to run and maintain. And few schools – if any at all – have contemplated maintaining an MBA program that loses money. Given that MBA programs have been financial donors – supporting other school spending – for a long time, schools may not be able to literally afford an MBA program that starts to lose money.

But the real impact of the incredibly shrinking online MBA program will probably be on schools that have yet to jump into the online MBA market – those planning to or even in early conversations. Since most of the cost of online programs comes before the first student enrolls, university leaders may have to ask themselves, “What if we build it and no one comes?”

It’s a question no school leader has had to seriously ask about any online program before, especially not the high-value, high-profile MBA. But they probably should ask, because the online MBA pie may simply not be big enough to sustain everyone who wants a bite.