SWOT: Digital Language Learning Market

Strengths

• There have been lots of consumers adopting digital language learning within the past few months, a trend that is being driven by COVID-19. According to Arnd Aschentrup, co-founder and CEO of language learning app, Tandem, the company witnessed a 200% increase in new users as a result of the pandemic.

• Despite current economic conditions, a report on the digital language learning market published in August 2020 notes that the market is poised to grow significantly through 2025.
• One of the strongest segments of this market is digital English language learning in the APAC region, as this market is expected to grow at a rate of 17.2% CAGR through 2027, and was already valued at $1.678 billion as of 2019. One of the key drivers of this growth is government investment and adoption of digital education schemes along with the prospering economical development of highly-populated countries.
• Advancements in educational technology and consumer adoption of these technologies are helping to drive demand in this market. This can be seen in the increasing adoption of A.I. technology which is beneficial when it comes to providing customized language learning solutions and solutions that effectively track student progress.
• Strong marketing and organic growth strategies used among key players in recent years have helped to expand the market and its consumer base. These tactics include product launches, product approves, patent registrations, and events.
• Likewise, lots of inorganic growth strategies have been implemented by key players in recent years, which have also helped to drive this market expansion. These strategies include acquisitions, partnerships and collaborations.
• The North American market has been showing solid growth in recent years and is expected to continue growing at a rate of 7.2% CAGR through 2027, and now perhaps even faster in light of new growth opportunities spurred by COVID-19.

Weaknesses

• Despite overall high levels of tech-based learning solution adoption, there are still low levels of consumer awareness of these products in some parts of the world.
• The market is highly competitive with a large number of players. This creates significant challenges for new entrants and other companies hoping to capture a significant share of the market.
• Many players in this market operate free, semi-free or low-cost pricing models as a way to attract consumers, which isn't inherently a weakness. However, this practice has attracted some negative media attention. For example, an article published in the Boston Review in July 2020 lambastes the practice as one that propagates the use of underpaid gig workers and other exploitative labor practices.

Opportunities

• Despite economic conditions caused by COVID-19, there is still plenty of opportunity for companies in this market to grow. This is evidenced by the range of startup funding activities taking place in this space, even as the pandemic rages on. For example, language learning app, Tandem, closed a $5.7 million Series A funding round in July 2020. The company has been experiencing growth opportunities as a result of shifting social dynamics caused by the pandemic.
• COVID-19 has helped to accelerate the adoption rates of digital and online learning, which is creating growth opportunities in this market.
• The American Academy of Arts & Sciences reported that there has been "a steep decline in foreign language instruction in America's colleges and universities." A study of colleges between 2013 and 2016 found that 651 college level foreign language programs had been cut, which was significantly higher than those that had been cut between 2009 and 2013. Although this could pose a threat to the market if these entities provide a primary revenue stream for some market players, this may also be seen as an opportunity to capture independent learners who may have to seek out places other than their college campus to learn a language. This bodes doubly well considering the current generation of college students and those upcoming are digital natives.
• Although there are a lot of players in this market, there is a lot of opportunity for players to differentiate themselves within the way they provide language learning services, as the number of creative ways to provide a language learning service appears to be quite limitless. . For example, while Duolingo and Tandem both provide digital language learning services, they have entirely different service models, wherein Duolingo provides self-paced modules and lessons and Tandem provides a matching service for language learners to connect and practice their language skills together, along with providing access to professional tutors.
• There is opportunity for companies capture market share in the APAC region through corporate partnerships. According to insights published by GobeNewswire, "digital English language learning market players in APAC have been experiencing substantial growth in the recent years owing to the increase in procurement of their services by the corporate sector. Corporate communication is one of the most critical functions faced by various employees working in APAC organizations. Pertaining to this fact, several companies operating in different countries in APAC are undertaking initiatives to enhance the proficiency of English language among the employees. This factor is boosting the digital English language learning market through corporate sectors in APAC."
• This market is highly segmented, which presents a lot of opportunities for companies to develop a strong niche within the market. For example, one report has segmented the market by solution, deployment type, application, vertical and geographical. The market is further segmented based on language type, business type, and end-user.

Threats

• This market is very crowded and competitive, as there is a significant number of large and well-known key players, including Duolingo, Babbel, and Tandem.
• Likewise, the consumer base within this market has been declining in recent years, particularly within the American market. This decline has largely been attributed to a decline in language requirements at various levels in society, including a decline in educational language requirements in high schools and universities, as well as a decline in bi-lingual employment requirements. The American Academy of Arts & Sciences even states that one in four U.S. Foreign Service officers don't meet the foreign language requirements for their positions.
• Despite the declining consumer base in recent years, the COVID-19 pandemic has inspired a flood of new digital language learners. While this is a clear opportunity for the market, this uptick in users has also inspired new entrants and partnerships which, although small, can have quite an impact in terms of competitive advantage. For example, in August 2020, Walton County announced that the Walton County Public Library System was providing the public with free access to Mango Languages, so long as they have a library card.
• In recent years, there has been an increasing number of students wishing to pursue higher education at foreign universities, which has been helping to increase demand in this market. However, it may be assumed that recent changes to the higher education landscape tied together with travel restrictions will likely dampen this trend significantly.