What Discord Is, and Why Microsoft Covets It
(Bloomberg) -- Every month or two, a social media platform grabs the spotlight, intriguing some and baffling others. In 2020, former President Donald Trump’s campaign to banish TikTok brought outsize attention to the video app. Earlier this year, Clubhouse surged to prominence as people scrambled for invitations to join chat rooms for the Silicon Valley elite. The platform called Discord is not new, but talks about a $10 billion sale to Microsoft has gotten the world wondering about this video game-centric chat app.
1. What is Discord?
Jason Citron and Stan Vishnevskiy, programmers and entrepreneurs, founded San Francisco-based Discord in 2015 as a platform for people to chat while playing video games together. The free service offers voice, video and text as well as gamer-friendly features, including the ability for users to broadcast the name of the game they are playing. During the pandemic, with people stuck at home and playing more video games than ever -- and also looking for ways to safely socialize -- Discord became a hub for communities as diverse as the Black Lives Matter movement, homework help, book clubs and more. It began pitching itself as a “place to talk.”
2. How big is it?
The site now claims more than 140 million monthly users and says it brought in $100 million in revenue last year. Discord doubled its valuation last December to $7 billion, according to The Wall Street Journal. It has raised a total of about $480 million, according to Crunchbase, from investors including Greenoaks Capital.
3. What’s its appeal?
The app rose to popularity alongside smash multiplayer hits like Epic Games Inc.’s Fortnite. Players like to be able to chat with each other while taking out the enemy. But Discord has attracted fans beyond gamers and now is positioning itself as appealing to anyone who wants to be able to tap into a hive of like-minded interests. On Discord, anyone can create their own community, or server; current servers have memberships ranging from one to hundreds of thousands. A typical user might belong to one private Discord server, to hang out with friends, plus public servers dedicated to discussion of a favorite movie or sports team.
4. Why is Microsoft interested?
For Microsoft, these varied communities may be Discord’s biggest selling point. The software giant, which last year sought to buy social-media app TikTok and held talks to acquire Pinterest Inc., has been shopping for assets that would provide access to thriving communities of users, according to people familiar with the company’s thinking. The maker of the Xbox console has snapped up numerous video game companies recently, including the publisher ZeniMax Media Inc. in September for $7.5 billion. Microsoft may seek to integrate Discord with Xbox Game Pass, its Netflix-like subscription service for video games. But one person familiar with the talks said that Discord is more likely to go public than sell itself.
5. How does Discord make money?
One of the keys to Discord’s popularity is its lack of advertisements. Rather than populate channels with intrusive ads like other social media services such as Twitter Inc., Discord makes money with a subscription service called Nitro. For $10 a month, members can customize tags next to their user names, upload larger files and stream at higher video quality.
6. What kinds of problems has it had?
Discord was used as a gathering ground for White nationalists to organize the 2017 rally in Charlottesville, Virginia, that turned violent and led to a death of a counterprotester. Since then, the company has made efforts to clean up its site and make it more inclusive. The investor coalition notorious for boosting GameStop stock from its perch on Reddit also had a server on Discord but was banned earlier this year for not doing enough to stem hate speech.
7. Is it basically still a gamer site?
It’s still hugely popular with gamers, but people use it for all sorts of conversations, even on official video game channels. Discord has become a useful way for video game companies to directly promote products and foster communities. The company will verify servers based on popular video games, giving them a stamp of authenticity. Some game developers participate in their Discord channels, allowing fans to interact directly with the people behind their favorite titles. The official Discord community for the hit game Among Us, for example, has more than 413,000 users. Among Us community director Victoria Tran described it as “pretty chaotic, but a lot of fun.” She said that people use the server not just to talk about the game and find people to play with, but to have broader conversations about their lives and interests.
The Reference Shelf
- Bloomberg’s Fully Charged newsletter examined why buying Discord could make sense for Microsoft.
- A user’s guide from PC Magazine.
- Discord may have stumbled into the future of the internet almost by accident, according to this 2020 piece on the website Protocol.
- The Wall Street Journal explored Discord’s surging popularity.
- A Forbes article on Discord’s struggle with hate speech.
©2021 Bloomberg L.P.