Overview

In 2022, I wrote an article for the Ivey Business Review, my school's corporate strategy magazine, proposing a strategic partnership between the language-learning platform Duolingo and streaming giant Netflix. In short, Duolingo should launch a Netflix Hub on its platform, enabling users to learn a language by engaging with their favorite television shows.

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The following sections are just snippets from the full article. Read the full piece here!

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Problem Statement

Duolingo is a language-learning platform that offers courses in 40 languages, allowing users to practice speaking, listening, and writing through bite-sized lessons. The company’s mission is to democratize access to language education worldwide.

Since its launch in 2012, Duolingo has sustained an impressive revenue trajectory, with 2021 revenues totaling $250.8 million, a boost of 55 percent relative to the prior year. The company’s freemium pricing model has enabled it to achieve tremendous scale, with the app boasting over 500 million downloads worldwide and 41.7 million monthly active users (MAUs). The business consists of four revenue-generating segments: paid subscriptions, advertisements, fluency certification tests, and virtual goods. The vast majority of its revenues (72 percent) originate from its subscription service, Duolingo Plus.

However, the premium package offers very few add-on features aside from an ad-free environment and the ability to make unlimited mistakes. The minimal value differential between the two tiers provides little incentive for free users to purchase a premium subscription. This is evident in the composition of Duolingo’s user base: in 2021, paid users accounted for a mere 5.5 percent of MAUs, illustrating the immense potential for revenue growth through upselling. In the same year, the company’s net loss totaled $60.1 million, compared to $15.8 million in the previous year. To become profitable, Duolingo must grow its user base, improve subscriber conversion, and increase paid user retention.

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User demotivation remains a key challenge when pursuing these three objectives of adding, engaging, and retaining users. The company notes that “staying motivated is the hardest part of learning something new,” which is why CEO Luis von Ahn hopes to build a future where people want to spend their time learning. Consequently, to one day turn a profit, the question becomes:

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What should Duolingo build to increase perceived value in its premium services and ensure that paid users have the tenacity to keep learning?

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Solution

Duolingo should launch a Netflix Hub on its platform, enabling users to learn a language by engaging with their favorite television shows. This offering would serve to attract new users who are heavily invested in Netflix’s content and improve user retention, as entertainment is proven to motivate language learning. In turn, the streaming giant would be able to monetize its IP and bolster fan engagement. Ultimately, this initiative should allow Duolingo to grow its user base, convert a greater portion of users to first-time subscribers, and increase renewal rates.