(Bloomberg) – Microsoft Corp. and Discord Inc. keeps a lot of swing with fans of video games. As they now hold talks for a potential $ 10 billion acquisition, an agreement between two companies will join audiences far beyond gamers.
Jason Citron and Stan Vishnevskiy, programmers and entrepreneurs, founded Discord in San Francisco in 2015 as a platform for people to chat while playing video games. The free service offers voice, video and text as well as gamer-friendly features, under which users can broadcast the name of the game they are playing.
The app became popular a few years ago and teamed up with hit multiplayer hits like Fortnite from Epic Games Inc. It also has a sinister side to its history, as it was used in 2017 as a rally for white nationalists to organize the deadly rally in Charlottesville, Virginia.
Since then, the company has made efforts to clean up its website and make it more inclusive. Last year was an ‘important’ year for Discord, new chief financial officer Tomasz Marcinkowski said in a blog post earlier this month. During the pandemic, with people sitting at home playing more video games than ever before and also looking for ways to move safely, Discord became a hub for communities interested in the Black Lives Matter movement, homework help, book clubs and more, and themselves as a “place to talk.”
Discord’s service has long attracted well-known players and influencers on social media. It was that time three years ago when Fortnite’s biggest player, Ninja, commissioned hip-hop legend Drake to set up his Discord account. More recently, there have been WallStreetBets. The investor coalition notorious for raising GameStop shares from its seat on Reddit also had a server on Discord and was banned earlier this year for failing to do enough to stem hate speech.
The site now claims more than 140 million users per month and generated $ 100 million in revenue last year. Discord doubled its valuation to $ 7 billion last December, according to The Wall Street Journal. According to Crunchbase, it raised a total of about $ 480 million from investors, including Greenoaks Capital.
Read more: Game services like Twitch and Discord are currently booming
On Discord, anyone can create their own community or server, which can range from less than ten people to hundreds of thousands. The average user might belong to one private Discord server that they only use to hang out with their friends and other public servers dedicated to discussing their favorite movie or sports team.
For Microsoft, these different communities could be Discord’s biggest selling point. The software giant, which wanted to buy a social media app TikTok last year, has been in talks with Pinterest Inc. accessed, according to people familiar with the business, looked at assets that provide access to thriving communities of users. The Xbox console maker has recently snatched up numerous video game companies, including publisher ZeniMax Media Inc. for last fall for $ 7.5 billion. Microsoft may try to integrate Discord with Xbox Game Pass, its Netflix-like video game subscription service.
One of the keys to Discord’s popularity is the lack of advertising. Instead of channels with intrusive ads like other social media services like Twitter Inc. to fill, Discord earns money with a subscription service called Nitro. For $ 10 a month, members can customize tags with their usernames, upload larger files, and stream at higher video quality.
Disagreement has also become a useful way for video game companies to promote products directly and promote communities. The company will verify servers based on popular video games and give them a stamp of authenticity. Some game developers participate in their Discord channels, which allow fans to communicate directly with the people behind their favorite titles.
For example, the official Discord community for the hit game Among Us has more than 413,000 users. Victoria Tran, director of the community, described it as “fairly chaotic, but a lot of fun.” She said that people use the server not only to talk about the game and to find people to play with, but to have broader conversations about their lives and interests.
The server ‘is a fun way to connect directly with our players, even if it’s not necessarily related to the game,’ Tran said. She added that the video game servers could also be a place for players to report bugs and make direct suggestions to game makers. “Disagreements are just a great way to get feedback that you might not otherwise be able to get,” she said.
Disagreement could also be helpful for smaller games that may not have the reach of Among Us but still want to provide a place for fans to chat, game developers say.
“We really just wanted to build a low-key community that was fun to hang out in,” said Megan Fox, founder of independent game development studio Glass Bottom Games. The first game, Skatebird, is about birds on skateboards. There is a Discord community of about 900 users who, according to Fox, mostly use the server to talk about ‘birds or skateboarding’. She said the studio also has a channel meant for users only to share ‘your kickflip effort’. Many Discord servers rely on humor and inside jokes, which are part of the profession.
The news of a potential deal has inspired mixed reactions in the gaming community. “If Discord goes on sale, Microsoft may be one of the safest places to go without experiencing major changes,” said Rod Breslau, an esports and gaming consultant who works with companies such as Sony Music Entertainment. . Microsoft has taken a practical approach with recent acquisitions, such as LinkedIn and GitHub, he said.
But not all players are excited about the prospect. Twitter on Tuesday was full of people begging Discord not to sell. Some Discord channels were also filled with negative reactions to the idea of further consolidation of the video game industry.
“Players in particular have had a whiplash of various Microsoft grievances in the past,” Breslau said. “And who really wants to see one of the big corporate dominators continue to engulf parts of the industry?”
That may not be the case. One person familiar with the discussions is more likely to display disagreement than to sell himself.
For more articles like this, please visit us at bloomberg.com
Sign up now to stay ahead of the most trusted business news source.
© 2021 Bloomberg LP