Microsoft buys communities. From the 20% Facebook investment to LinkedIn, GitHub, Minecraft, etc they are aggregating and integrating massive, generation defining audiences. Discord is most definitely that for gamers, pandemic teens, and frankly any SMB with foresight. It’s a fantastic platform. It has the same moderation issues that all online communities have, but it generally happens at a server level.
It’s very much a fit for their portfolio, and it’s a great time to sell for them. Nitro can’t do that much in sales, but certainly Microsoft will find a way to make money with it.
Discord is in this weird situation where they've been massively successful at some specific things that people aren't willing to spend money on, and not, as best as I can tell, anywhere else.
They're absolutely the community chat tool of choice these days - just about every subreddit you go to, every fandom you could ever think of, has a discord community. It's incredibly easy to put one together.
But things like Nitro seem to have minimal adoption. The game store isn't particularly compelling. They've got some partnerships with games where they offer Discord up as the actual in-game voice communication, but I haven't seen much adoption of that, and I don't know if it actually results in revenue for them, either.
It's not unique - we've seen plenty of major tech companies in similar spots - but they've basically all pivoted to advertisements as a way to make money, something that Discord has categorically said they don't want to do. I don't know what they could do to really turn things around here.
I'm continually impressed with Discord and their technical blogs contribute to my respect for them. I use it in both my personal life (I run a small server for online friends, plus large game centric servers) and my professional life (instead of Slack). It's a delight to use, the voice chat is extremely high quality, text chat is fast and searchable, and notifications actually work. Discord has become the de facto place for many gaming communities to organize which is a big deal considering how discriminating and exacting PC gamers can be.
My only concern is their long term viability and I don't just mean money wise. I'm concerned they'll have to sacrifice the user experience to either achieve sustainability or consent to a buyout by a larger company that only wants the users and brand. I hope I'm wrong, and I bought a year of Nitro to do my part.
I'm bearish on Discord. Unlike Slack, it targets a price-averse demographic and is attempting to enter spaces that are very saturated (Steam, Origin, Epic, Ubisoft are already crushing the digital distribution medium), so then it's basically an IRC replacement for gamers.
I understand Slack's valuation as it targets huge companies with up to decades-long contracts and has projected revenues > $1B for this year, but I just don't see Discord making money the same way. I use it daily with my friends, but none of us have Nitro (although the features are pretty neat). The only way I see it moving to profitability is doing targeted ads (which will significantly hinder user experience).
I don't know how things look from microsoft's point of view, but I see lots of "nice to have" aspects of being in charge of one of the popular social platforms.
Lots of people cut their programmatic teeth building simple things that interact with these platforms. It would be nice for Microsoft if every teenager building a bot to play fart noises on discord does so on Azure™ building with Microsoft Visual Studio Code™. The fact that AWS has been the standard "go to" place for people to get cloud servers up and running has been nice for them.
Also, it creates opportunities for these "cool" companies to write technical blog posts for your stuff. I think Discord has helped Elixir rise in popularity - I'm sure Microsoft would like to see something like their "how Discord scaled to 5m concurrent users" for C# (or whatever stack they want to promote).
Now, I have no idea how big a deal this would be. I really doubt it's a $10b big deal. I agree that "the community" isn't a reliable factor. If anything, I think this purchase puts the community at risk. People like that Discord is a small company that needs to care about how good its servers are. If they suddenly are owned by a giant company that might care less, people might look around for alternatives.
We use Discord as the primary communication channel for our two-man startup and love it. Both me and my co-founder pay for Nitro not because we want to participate in an "internet caste system" (my-founder is basically the only person that would actually see my "Nitro" status and vice versa), but because we want to support a great product that has served us well over the years. Some of the perks are fun but generally go unused by us.
I am similarly astounded that Discord hasn't tried to reach for the enterprise market — if they had good multi-account support, and the ability to have audit logging on corp accounts, I think it would be hands down better than Slack for that use case. It's already better than Slack for personal use cases IMO.
I hope they monetize in that direction rather than ads (Discord seems to still be pretty reliant on VC funding, which makes sense to me since Nitro is pretty cheap and not particularly necessary to use the product) — it seems less soul-eating. They've been dialing back the gamer branding at least, which could help reach a broader audience.
This is surprising given Discord had 2 fundraising rounds in 2020 alone. If that wasn't to gain momentum for an IPO, then they must just be losing cash very quickly.
For MS, the obvious integration point is Xbox Game Pass, but Discord has been busy pushing gamers off their platform for the past year in favor of broader communities. It'll be interesting to see if they reverse course here, or if MS will position Discord as a free community version of Teams.
If you're looking for a better alternative, check out Guilded (YCS17) - https://www.guilded.gg
I've heard users say Guilded makes Discord look like Skype, but didn't realize how accurate that would become.
Disclaimer: I work at Guilded, but views are my own, etc
In my opinion, Discord has done a good job of withstanding the typical enshittification[1] of their platform. I've been using Discord for 7 years now, and while I have my complaints (poor archival functionality, video streaming can be hard to troubleshoot), it's my go-to recommendation for anyone wanting to build a friendly online community.
I am deeply worried about their future because their path to profitability has always been a bit of question mark. As of this point in time, I pay for nitro namely for the higher video streaming bandwidth, and to hopefully vote with my wallet so that the platform doesn't try to squeeze more revenue out of its users in ungracious ways.
Discord's Partner program[3] seems like a good first step to assuage my concerns , but at the end of the day it puts them more closely in competition with Twitch and YouTube, since all of these platforms are basically competing for broadcast time from a small handful of entertainers with huge amounts of loyal followers willing to subject themselves to ads.
Yes, the model is entirely built on acquisitions, where discord itself can't be profitable, but part of Microsoft it can deliver value by deepening the mote around everything else.
Many things are only valuable as a public good or part of monopoly. Such is funny relationship between monopolization and socialism.
So what is Discord's path to profitability? They tried selling video games and closed the store not too long after launching it. Nitro/Server Boosts definitely don't come close to the cost of operation.
I wonder how Microsoft is going to respond to this..?
Although a slightly different market, I could easily see
them acquiring Discord and rebranding it towards corporate customers turned off by the incoming Salesforce integration with Slack. After all, Slack managed to Trojan Horse it's way into companies, and now with many people using Discord at home... it's not a stretch to say Discord could take the same approach!
Discord have recently been actively re-positioning themselves less towards the gaming community overall, and more towards being a general purpose chat application.
Teams will likely see a flurry of updates and new features as well.
Nitro is one of extremely few SaaS things I actually pay for, it's seems very worthwhile given how generally not fucked the discord experience is in terms of trying to extract value from their users.
Discord, however, is a bit of a lifestyle brand like Twitch. It's where conversations happen, and it's incredibly useful to the gaming community. If they can get even a toehold with their subscription services and store, I think they have a very serious chance of turning towards something valuable.
It’s very much a fit for their portfolio, and it’s a great time to sell for them. Nitro can’t do that much in sales, but certainly Microsoft will find a way to make money with it.
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