Case Study: Rosetta Stone

Breaking Down Language Barriers with Rosetta Stone

Rosetta Stone, best known for its language-learning products, was established in 1992 and teaches users how to master more than 30 languages. After going public in 2009, Rosetta Stone identified Japan as a key territory and invested heavily in the market, but were not as successful in the region as they had initially hoped. They limited their involvement in the region to direct sales online, and sought a partner that better understood the nuances of the culture and audience to help with the local retail channel.

Recognizing that SOURCENEXT was in a unique position to help the admired leader in language learning, founder and CEO Noriyuki Matsuda reached out personally to Rosetta Stone CEO John Hass, and began discussions. Soon, SOURCENEXT was selling Rosetta Stone’s products in its eShop. While initial sales were strong, Nori and his team felt they could make an even bigger splash and significantly broaden the customer base in Japan at a lower price point.

Following SOURCENEXT’s initial sales success, a deal was struck and Rosetta Stone sold perpetual sales rights for all Rosetta Stone products within the Japan territory to SOURCENEXT and ultimately sold the Rosetta Stone Japanese entity to SOURCENEXT. With full control over sales, SOURCENEXT lowered retail prices in line with Japanese audiences’ expectations, resulting in brisk sales immediately. The deal also gives SOURCENEXT rights to develop new products and utilize the Rosetta Stone brand name. SOURCENEXT is planning to significantly increase the Rosetta Stone portfolio of products within Japan and is investigating TOEFL and TOEIC versions to help college students and corporate employees respectively, and is also looking into artificial pocket translators and other offerings. Rosetta Stone has first right of refusal to license any products SOURCENEXT develops using the Rosetta Stone brand name back into territories outside of Japan.

“Rosetta had been working to penetrate the Japan region for years before finding the right partner in SOURCENEXT. Under Nori’s counsel, we have not only found success in the Japanese market, but we also have the potential to grow our product portfolio exponentially, and give the Japanese population the ability to affordably expand their language learning.” – John Hass, Chairman, President and CEO, Rosetta Stone

In a win for everyone, SOURCENEXT now delivers industry-leading language learning to Japan at an affordable price, while Rosetta Stone’s brand has successfully penetrated another territory with an invested, committed development partner.