Duolingo and the Language-Tech Market

Duolingo is undoubtedly one of 2021’s most exciting internet IPOs. It went public earlier this year at $102 per share, and its rising stock price has yet to deflate like many other recent IPOs.

By Sarah Lao

Rotund, green, and with wide eyes glossed over in a threatening sheen, it’s Duo — holding a gun to your head after you’ve once again neglected your daily Spanish lessons. Viral memes aside, the spectacular popularity of the Duolingo app reflects the increasing demand for ways to learn new languages online, and there have been no shortage of startups entering the market to answer that need.

Overview of the Market

For most, the size of the language learning market comes as a surprise. While the importance of languages are frequently ignored in the U.S. — aside from the few credits needed for a high school diploma — the market is much larger globally and includes a high number of prospective immigrants seeking work in the U.S.

The growth seen in the market has been astounding. Duolingo expects the market size for language learning to double from $61 billion in 2019 to $115 billion in 2025. Notably, the online piece of the market is growing at a faster rate, nearly quadrupling from $12 billion in 2019 to a predicted $47 billion.

Many factors are driving this growth: globalization and the growing need for communication across borders, an expanding E-learning market, the penetration of AI in E-learning, and the impact of Covid-19. In addition, the increase in spending on the education sector, a rising internet and mobile phone user base, and the preference for multilingual employees have also played a key role in the development of the market. Recent trends also include flexible pricing structures and wearable technology.

Common Business Models

Everyone has different learning styles, and the variety of business models found in the language tech space accounts for this fact. There are four dominant models: software based language learning, live one-on-one language learning, structured live language learning, and AI based language learning apps.

Each offers their own set of pros and cons — software based language learning is simple yet lacking in “original input” or “real output,” live one-on-one learning is flexible/personalized though instructor quality varies, structured live language learning employs certified teachers for a more expensive cost, and finally, AI based language learning apps are efficient and effective but rarely include languages besides English. The decision of which is best is largely dependent on the personal preferences of the consumer.

The Future of Duolingo

Duolingo is undoubtedly one of 2021’s most exciting internet IPOs. It went public earlier this year at $102 per share, and its rising stock price has yet to deflate like many other recent IPOs.

As of right now, Duolingo’s revenue clocks in at a quarter billion annually — which means it’s penetrating only 1% of the overall market. With its strong momentum and compelling UI, it’s easy to see Duolingo soon capturing a much larger chunk of this market.

What’s more, not only is Duolingo’s number of users growing, the willingness to pay for language learning is also on the rise. In 2020, Duolingo converted 4% of its 36.7 million monthly active users into paid subscribers though historically, only 1% of its users were paid. In this way, Duolingo has been successful in convincing loyal users to upgrade their experience to Duolingo Plus.

Startups to Keep an Eye on

Memrise: a specialist in combining cognitive science, powerful tech and entertaining content to make language learning fun

Fluentify: a startup offering 24/7 30-minute one-to-one video sessions with qualified English tutors, via their secure, integrated video conferencing platform.

Chatterbox: a platform connecting the linguistic talent and cultural insights of refugees with language learners in both online and in-person lessons