Rosetta Stone, whose language-learning software kiosks are ubiquitous in airports and malls worldwide, purchased one of their main international competitors. This morning, the Virginia-based company announced the acquisition of Livemocha, a freemium online language-learning platform with a developed cloud backend and a large international userbase. Rosetta Stone is in the midst of a large campaign to transform their cloud-hosted (as opposed to CD-Rom) products into the company’s primary moneymaker. They bought Livemocha for $8.5 million in cash.
In statements, Rosetta Stone emphasized that the Livemocha purchase was for their cloud backend and demographic mix. “Livemocha will enable us to quickly migrate our legacy products to a future-proof technology stack with a modern, cloud-based architecture and contemporary means of distribution,” Rosetta Stone chief product officer West Stringfellow said. “But even more exciting, it gives our customers more choice. Livemocha presents us with a low-cost or even free alternative product to offer learners around the world. It becomes a ‘ladder of learning and value’ for our customers.”
While users of Rosetta Stone’s higher-priced products are concentrated in North America, Western Europe, Japan, and South Korea, Livemocha has a more diversified international footprint.
In other words, acquiring Livemocha allows Rosetta Stone to monetize language learners in emerging global markets who can’t afford hundreds of American dollars for their traditional software packages.
In an email to subscribers, Livemocha CEO Michael Schutzler characterized the Livemocha acquisition as “agree[ing] to merge with Rosetta Stone.”
Language learning has become a major online revenue generator outside of the United States thanks to a growing demand for business English skills worldwide. Babbel, which offers free mobile and tablet language-learning products as a loss leader, closed a $10 million funding round last week. Duolingo also offers a free language-learning product, which is expected to generate revenue through corporate partnerships.