Discord, the popular chat platform that rose to prominence with gamers, could soon have a new owner. And its reported sale price demonstrates how important tech giants believe it is to have more exposure to young consumers.
The platform is exploring its options “in the wake of interest from multiple parties that want to buy the company,” VentureBeat reported yesterday. Bloomberg later reported Microsoft is one of the interested parties, and is now in talks to acquire Discord for more than $10 billion. Discord and Microsoft both declined to comment.
Founded in 2014, Discord was originally created to help gamers communicate with friends while playing video games. It provides video, voice, and text chat options to users for free. Discord makes money—$130 million in 2020, according to the Wall Street Journal—by offering a premium “Nitro” subscription that gives users additional features like special emoji, HD video, and bigger file sizes.
Discord’s reported valuation is further evidence of the fusion of video games with mainstream culture. Epic Games, the developer of Fortnite, is worth upwards of $28 million, Sky News reported. Earlier this month, Roblox, the game creation platform that’s wildly popular with children, went public at a valuation of $42 billion. The Covid-19 pandemic helped create hordes of new gamers who were stuck indoors. It also turned many casual gamers into hardcore ones.
Though it is still largely used by gamers and gaming-adject online communities, Discord broadened its scope to more general use last year. It now has more than 100 million monthly users and 13.5 million active servers—essentially glorified chatrooms where users can share files in addition to hang out virtually.
Gaming’s biggest communication platform
Discord is the platform of choice for the vast majority of popular video game live streamers. When linking up with other streamers to play a game, they will typically chat through Discord rather than use in-game communication tools. Discord is widely viewed as a more reliable and higher quality audio option than what the games themselves can provide.
Microsoft’s reported interest makes a lot of sense: In recent years, the company ramped up its investment in gaming, in part to boost the value of its Xbox game pass subscription service. It finalized a deal earlier this year to buy ZeniMax—the game developer behind popular franchises like Fallout and Elder Scrolls—for $7.5 billion. Microsoft acquired the live streaming platform Mixer in 2016 with the hope it might rival the Amazon’s Twitch, though the company abandoned that effort last year after it had trouble scaling the business.
Observers said Discord could end up fetching a lot more than $10 billion, especially if other tech companies join Microsoft in a bidding war. Amazon, Google, Twitter, and Facebook have all shown an interest in expanding their gaming portfolios, although any tech giant making an offer will likely face antitrust scrutiny.
The company that buys Discord would instantly have access to a giant (and growing) community of highly engaged digital consumers. But with that comes baggage: Discord became the communication platform of choice for the alt-right and other nefarious groups before the company improved its moderation practices. Today, 15% of its employees contribute to a trust and safety team that monitors servers for problematic activity.