Web-based tutorials take off in South Korea

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(CNN) -- When the school day is over in South Korea, thousands of students head straight back into the classroom.

Parents spend a small fortune to send their children to "cram schools" -- or "hagwons" -- where students study well into the evening, trying to get ahead in the country's hyper-competitive education system.

It is little wonder then that an online version run by the public company Megastudy is one of the Korean stock market's great success stories.

Founded in 2000 by former hagwon teacher Son Joo-eun, the concept of a Web-based tutorials grew after observing the popularity of TV home shopping and the Internet.

"I was a social studies teacher. It's a subject based on reality. So I was paying attention to changes in society. I noticed a shift in the education market from off-line learning to online," Son told CNN.

The concept seems a perfect marriage. South Korea is one of the world's most wired countries, with some estimates suggesting up to 75 percent of households have access to broadband. Education, meanwhile, is a national obsession in South Korea. It is highly regarded and extremely competitive, hence the popularity of the privately run hagwon industry which the Financial Times estimates is worth about US$15 billion a year.

Megastudy was started with Won 300 million (US$320,000) before it listed on the Kosdaq technology market in December 2004.

Shareholders include Son at 20 percent, the management team a combined 6 percent and Cornerstone Equity Partners 10 percent. Foreign investors account for 44 per cent of shareholders.

The beauty of Megastudy is students can download the tutorials they want from any location.

At least part of its success is due Megastudy's choice of teachers or lecturers who can quickly take on star status.

Instructor Peter Yoon left a career in a conventional classroom to teach for Megastudy. His online lessons have made him so well known that students often approach him for autographs when he makes personal appearances at study sessions.

"Teaching English through the online services has made me more popular... from just a local teacher to kind of a national teacher," says Yoon.

Teachers such as Yoon take home a cut of the profits from their online lectures. The more students registered, the more teachers earn.

The Financial Times reports that Megastudy's most popular teacher, a charismatic English-language instructor, earned more than US$2 million in a year.

Soon's next challenge is whether -- given the cultural and technological differences -- he can emulate Megastudy's success overseas.

The Electronic Times reported that a joint venture was planned in either China, Japan or the United States this year.

Meanwhile Son, who taught in cram schools for 14 years before starting Megastudy, still gets a buzz from teaching.

"Personally, teaching is the energy of my life. It helps me lose the stress of managing the company. Nowadays, teaching is happiness for me," he says.

CNN's James MacDonald and journalist Bina Brown contributed to this report.

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