It's kind of amazing to see several of my hobby horses joining powers. This week, language-learning expert Duolingo (DUOL +0.96%) teamed up with boardgame destination Chess.com for a cross-promotion, and I don't think this would have happened without an accidental assist from video-streaming pioneer Netflix (NFLX 1.74%).
That's what's going on right now -- and I think it's a brilliant marketing move for Duolingo.
My personal investment in chess, Netflix, and Duolingo
First, let me explain why this combo is such a big deal to me, personally speaking. I'll admit that my involvement may be tighter than most, but this story can't be unique. If nothing else, there are plenty of Netflix millionaires out there.
- I started a chess club in middle school, way back in the 1980s, and never stopped playing. Besides the countless over-the-board games under my vest, I have racked up nearly 31,000 games on Chess.com and a few hundred at Lichess.org. That old board never runs out of surprises. Chess is a lifelong passion of mine, and I love to see the game growing in popularity.
- Swedish is my native language. I have a degree (and some experience) in English and studied Russian in high school. Before that, my walls were covered in maps and flags. So when my Foolish friend and colleague Rich Smith introduced me to Duolingo's language-learning fun in 2014, I was hooked immediately. Thanks to Duolingo, I can keep up with my wife's Guatemalan family (if they speak slowly!) and struggle my way through written French and Esperanto. My unbroken streak of daily Duolingo practice goes back to June, 2016. I'll never be fluent in the 13 languages I pursue, but it's a blast to find connections and similarities between Arabic, Ukrainian, and Greek. So that's another longtime passion for me.
- Netflix was one of my first investments. The first shares of this then-future entertainment mogul entered my portfolio in 2005, at a split-adjusted price of $0.73 per share. Though I've sold a few shares over time, in order to rebalance and diversify my portfolio over time, it's still my largest holding by far. Some passions can be profitable, too.
But enough about me. Let's talk about Duolingo's newfound love for chess.
NASDAQ: DUOL
Key Data Points
The Netflix connection
The importance of Netflix to this chess-based matchup should be obvious, especially if you are new to the game. Millions of people picked up the classic board game in 2020, inspired by Netflix's award-winning miniseries, The Queen's Gambit. Starring Anya Taylor-Joy as the titular queen of chess and featuring game theory vetted by former world champion Garry Kasparov, this show put the game of chess front and center on a global stage. Director Scott Frank bent over backward to get the details right, from classic games to how players behave at major tournaments.
The show started a boom in the chess community. The influx on new players brought Chess.com's servers to their knees. The Queen's Gambit wasn't the only reason for this sudden popularity, but arguably the most powerful one.
So it's safe to say that Duolingo wouldn't lean into the chess community right now if Netflix hadn't produced a masterful series that placed chess pieces in the global spotlight. Yes, the movie-making veteran has the power to change the games people play and the music we listen to -- just by including hand-picked references in their shows and movies.
What is Duolingo doing on the chess board?
When I did my first Duolingo lesson in Japanese on November 1, I was greeted with the usual assortment of gamification rewards -- but one of them was not like the others. Beyond platform-specific rewards such as gems, experience points, and lesson-plan progress, I found Duo (the green owl), at a simplified chessboard:
Image source: Duolingo.
Complete November's monthly quest, and I'll get a free month of premium membership to Chess.com. Now, that's a sweet promotion I could actually use.
Later that day, I ran into Duolingo and Chess.com cross-promoting this partnership in several ways. From online ads to YouTube videos, Duo and his cartoon friends shared their love for 64 squares and en passants.
From the other side of the fence, Chess.com offers computer-powered chess bots based on the Duolingo cast. And whether you win or lose, the game will end with a quick promotion of Duolingo's services. For example, the low-rated but supremely confident Oscar might share this idea at the end:
"Before we have a rematch, I need a second to review my strategies. Why don't you go do a language lesson to pass the time?"
What's the big idea?
It's an expertly crafted partnership, promoting chess to Duolingo members and Duolingo to chess players. And there seems to be real value in this pairing. Chess.com passed 100 million active members in December 2022. Duolingo sported 50 million monthly active users in the summer of 2022 and 74 million active accounts one year later. So we are watching two heavyweights working together.
I don't know exactly how well the Venn diagram between chess players and Duolingo enthusiasts might overlap, but the pairing makes perfect sense. We should get a quick update on this latest-and-greatest promotional matchup when Duolingo reports third-quarter results next week. The chess site will probably sprinkle in updates across its social media accounts, but it's a private business that doesn't publish quarterly results.
Either way, this looks like a smart marketing move from both sides of the board. It's unclear who's paying who, if any cash payments are involved, but this promotion will almost certainly boost memberships and activity for both Duolingo and Chess.com in November 2023.
That's another chapter in a classic long-term growth story, and one more reason to pick up some Duolingo stock.
