The Rise of ChatGPT and the Decline of Chegg: A Paradigm Shift in Online Education

New technologies and changes applied in online education demonstrate a fierce competition for capturing students' attention. Chegg, a platform that was once a favorite for textbook rentals and homework help, now finds itself at a critical crossroads.

The emergence of ChatGPT, a free artificial intelligence tool that offers instant answers to a wide range of questions, has radically changed the landscape, leaving Chegg struggling for survival.

The Fall of a Giant

During the pandemic, Chegg experienced significant growth by providing easy access to study guides and step-by-step solutions, becoming an invaluable resource for students confined at home. However, the arrival of ChatGPT has disrupted this balance. With the ability to answer almost any question quickly and for free, ChatGPT has captured the attention of students, who now prefer this tool over Chegg's $19.95 per month subscription service.

The impact has been devastating for Chegg. The company's stock has fallen 99%, resulting in a $14.5 billion loss in market value. This decline raises serious doubts about Chegg's ability to adapt and thrive in a rapidly changing environment.

The Preference for Immediacy and Gratitude

Students' preference for ChatGPT is due to its free access, immediacy, and ability to provide accurate answers without the worry of whether the problem is covered or not. Jonah Tang, an MBA student at Point Loma Nazarene University, highlights these advantages, reflecting a sentiment shared by many of his peers.

A survey by investment firm Needham reveals that only 30% of college students plan to use Chegg this semester, compared to 38% in the spring. In contrast, 62% plan to use ChatGPT, a significant increase from 43%.

Survival Strategies

Facing this challenge, Chegg has taken drastic measures, including laying off 441 employees, a quarter of its workforce. The company is attempting to reinvent itself by offering more comprehensive AI-assisted answers and live tutoring, hoping to attract "curious learners." However, the question remains whether these initiatives will be enough to reverse the trend.

To survive, Chegg needs to offer something truly unique that ChatGPT cannot replicate. This could include personalized services, immersive learning experiences, or strategic collaborations with educational institutions. However, investors remain skeptical about the company's ability to generate enough money to pay its debts.

The case of Chegg and ChatGPT is a clear example of how technology can rapidly transform a sector. While ChatGPT continues to gain popularity, Chegg must innovate and adapt to remain relevant. Online education is constantly evolving, and only those who can anticipate and respond to the changing needs of students will succeed in this new environment.