The Discord Business Model: How does Discord make money?
Discord is a popular group-chatting app created for gamers, but today it is used by everyone from local hiking clubs to art communities to study groups. Discord makes money through its premium subscription package, Nitro, Server Boosting and Commissions on Game sales.
Discord has more than 140 million monthly active users and has become a place where the world hangs out.
Discord: Company Profile
Let’s dive into the the company profile of Discord and look at how does Discord make money.
What is Discord?
Discord, which was first launched in 2015, is a popular group-chatting app with free voice, video, and text services. It was created for gamers as a place to build communities.
It has branched out to include other communities as well, ranging from artists to mental health. It is widely used by small and active groups of people who talk regularly. The platform now boasts of more than 140 million monthly active users.
People love Discord because it is a place where they can find other like-minded people who share interests and hobbies. Shared interests drive the conversations, so people naturally gravitate towards the platform. The Discord app is available for Mac, PC, iPhone, and Android devices.
Discord allows members to message each other just like messaging on Slack. Each community is called a “server.” Each server has different channels that are for a specific topic and follows particular rules.
You can use text channels on Servers or use voice channels and voice-chat with others. Discord also allows users to share images, videos, links, and music. Joining servers or starting your server is completely free.
Since there are thousands of servers, there’s a good possibility that you’ll find a server for the topic of your interest. However, the most popular servers are related to Video games and make up the bulk of Discord’s servers.
How was Discord started?
Discord was started by Jason Citron, the CEO, and Stanislav Vishnevsky, the CTO, both avid gamers.
Stan was so addicted to Final Fantasy XI, a multiplayer online role-playing game, when he was younger, that he assembled a team of 40 people in high school and earned enough points to become the game’s highest-ranking team in the world.
Stan had developed several online tools to communicate with his team. He tried to use the tools he had created for his team and build a service that gamers could use, but it didn’t take off.
On the other hand, Citron attended Full Sail University and took up a few programming stints at gaming startups before founding his first gaming social network, Openfeint. He was pretty successful and eventually sold it to a Japanese company, GREE, for $104 million.
Then, in 2013, Stan came to work for him as an engineer at Hammer & Chisel, the second company he started. Hammer & Chisel was started in 2012 “with the idea of building a new kind of gaming company, more around tablets and core multiplayer games.”
Stan had graduated from Cal State Northridge had worked for several mobile app startups in the Valley as a software engineer before getting introduced to Citron by a mutual friend.
They wanted to create what they both loved: video games. They built their first tablet-based, three-versus-three arena game, Fates Forever, and launched it a year later.
However, it didn’t take off. Stan suggested that they concentrate on the social network connecting gamers in a voice chat platform. They started working on this idea in Jan 2015 and launched it in May 2015.
When Discord was launched, text and voice chat technology such as Skype and Teamspeak was widely used but widely hated as well. However, Discord was much more user-friendly and had better functionality for gamers.
The main advantage was the ability to use Discord on a web browser or by downloading an app. In addition, gamers could create their chat rooms or servers for free and hold a conference call while playing a game.
Even after the launch, the app had only about 20 sign-ups, mainly from friends. Discord’s viral growth started after one user posted about the service on Reddit.
The thread started getting responses, and Stan offered to answer any question about the service. Six hundred users were added that day.
Discord’s feature-rich, intuitive design caught the attention of gamers and Discord became wildly popular almost immediately. Gamers loved the great tech stack and its small footprint. The app became a huge success because it was free and easy to use.
Discord’s success is largely because of the fact that they understood their target audience of young, tech-savvy gamers. From day one, they were focused on addressing the pain points of their audience. Although there were several alternatives to Discord, such as Skype, TeamSpeak, and Ventrillo, they were clunky to use
Discord’s initial growth was due to word-of-mouth marketing, but later the company realized the value of partnerships.
They partnered with Twitch, a huge brand and video game streaming service, and Fortnite, one of the most played games. Through these partnerships, they gained traction and visibility.
Discord’s features have grown as well, beyond chat functionality. They integrated with Spotify, enabling users to listen to music together.
Discord has become an effective way for developers to build communities around their games.
Mike Rose did this for RageSquid’s Descenders and used Discord as a central hub by bringing in gamers, giving them alpha and beta access, exclusive content, and meta-games. The audience it built became customers and evangelized Discord.
Discord has faced issues as well. It has its own share of hate groups as a result of the huge audience on its platform. However, the company has been proactive by taking several measures to combat abuse of the platform.
They have made sure that there is a trust and safety group in-house, people who respond to reports of abuse.
They also have automated systems and a 24/7 customer support team, in addition to very visible community guidelines. If these guidelines are broken, Discord bans users immediately.
Discord doesn’t market using traditional ways such as buying ads. The company has instead focused on the needs of players and communities by building products for these needs.
- Discord’s funding: Today, Discord has raised a total of $479.3M in funding raised over 12 funding rounds. Their latest funding was raised on May 3, 2021, from a Series H round. Discord has raised funds from Silicon Valley’s top VC firms, including Benchmark and Greylock. It is funded by 20 investors, with Sony Interactive Entertainment and Greenoaks Capital being the most recent investors.
- Discord’s users: Discord’s user growth has skyrocketed, with over 300 million registered users and more than 140 million monthly active users.
- Discord’s employees: The company currently has 882 employees.
- Discord’s valuation: Discord is valued at $3.5 B.
- Discord’s revenue: Discord’s generated $130 million in revenue in 2020. This was an increase of 188.88% of the approximately $45 million it generated in 2019.
How does Discord make money?
Discord’s revenue model is based on the freemium model, where the core product is free but users pay for premium features. Discord’s core product is free to use, allowing the company to grow rapidly.
Discord makes money through its premium subscriptions, Nitro and Nitro Classic, through commissions from games sold by developers on their server, and through charges on Server Boosting.
Discord also had a merchandising store which it recently paused. Let’s look in-depth at the ways in which Discord makes money.
1. Discord Nitro
Discord Nitro is Discord’s premium subscription package. It has several features that make for an ideal gaming experience, including the following
- Better emojis – You can collect or make your own custom and animated emojis.
- Personal profile – You can use an animated avatar and claim a custom tag.
- Support a server – Allows 2 Server Boosts and 30% off extra Boosts.
- Profile badge – To show how long you’ve supported Discord
- Bigger uploads – High-quality file sharing up to 100 MB, HD videos, and more.
- HD video – Hi-res video, screen share, and Go Live streaming.
Discord Nitro is priced at $9.99 per month or $99.99 per year. The Nitro Classic version is priced at $4.99 per month or $49.99 per year.
2. Discord Game sales
Discord makes money from commissions from games sold by developers on their server. Gamers can create their own storefront inside their server, free from competition, and whenever a game is sold, Discord makes a 10 percent commission.
3. Server Boosting
Boosting’ is the Discord term for upgrading. You can boost specific servers and improve the experience for everyone on the server and contribute to the online community. You can do this either for your own server or one that you’re an active member of.
A single server boost does not do anything. Server boosting works in an accumulative manner. A certain number of server boosts is needed to unlock certain levels that provide benefits.
The benefits can be performance or cosmetic improvements. The following are the Server Boost Levels, the number of boosts needed to unlock each level, and the benefits at each level.
Level 1 benefits:
- +50 Emoji Slots (for a total of 100 emojis)
- 128 Kbps Audio Quality
- Go Live streams boosted to 720P 60FPS
- Custom Server Invite Background
- Animated Server Icon
Level 2 benefits:
- Everything in Level 1 and…..
- +50 Emoji Slots (for a total of 150 emojis)
- 256 Kbps Audio Quality
- Go Live streams boosted to 1080P 60FPS
- Server Banner
- 50MB Upload Limit for all members (server only)
Level 3 benefits:
- Everything in Level 1 AND Level 2 AND…..
- +100 Emoji Slots (for a total of 250 emojis)
- 384Kbps Audio Quality
- 100MB Upload Limit for all members (server only)
- Vanity URL
Nitro or Nitro Classic subscribers get 30% off all Server Boost purchases and all Nitro subscribers get 2 Server Boosts with their active subscription.
Discord’s mission is to bring people together around community. Negotiation talks are underway for Discord’s sales process, which could result in Discord getting purchased for more than $10 billion. Discord seems to be in a great place now, and will be a strategic asset to any company in the space it operates in.
However, it remains to be seen if Discord can fulfil its mission as part of another company. Discord’s values might be best protected by staying independent. If it were to get acquired, it might be forced to adopt advertising, which it doesn’t want to do.
Discord refused to embrace advertising, although many people urged the founders to adopt it. They were against it because it would hurt the user experience. Instead, they reached out to other communities and found ways to grow their subscription revenue base. Discord is still growing and if it stays true to its mission and values, communities will continue loving the product.
We hope this article has shared some insight into the revenue model of Discord and how does Discord make money.
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