Discord, a communication app and social platform, lets you communicate with your teammates while playing video games online. In a nutshell, it’s like the Skype or Slack alternative of gaming chat.
It is blowing up (although perhaps for the wrong reasons).
In this article, I wanted to tackle Discord’s monetization strategies as well as its history and future revenue plans.
Let’s start first by knowing what’s this popular app in the online gaming world is all about.
What is Discord?
Discord is a free text, voice and video communication platform designed by gamers for gamers. This free software primarily focuses on providing high-quality, and lag-free voice chat to communicate and coordinate with other players around the world.
The app is pretty much a delight to all gamers because the reliable voice chat feature is completely free and it has vast limits when it comes to the number of members in a group chat.
Discord lets you participate in themed servers which can be generated by anyone logged in on the application. As long as you are given the invite or participation link, you can access to join the same servers. The admin of the group can host either text, voice or video channels which are used by the members to communicate on a particular topic about the game.
While Discord’s target audience encompasses gamers generally, the free chat app is also enjoyed by other interest groups varying from music, entrepreneurship, art, etc.
History of Discord
Discord has made a long journey from its humble beginnings as a voice over internet protocol (VoIP) side-project to becoming the world’s largest chat platform among gamers today.
The social gaming platform was founded by Jason Citron, who is also known as the co-creator of OpenFeint, a social network for gamers using iPhones. He eventually sold the OpenFeint technology to the giant Japanese social networking service, GREE, in 2011 for US$104 million, which the CEO used to build his studio, Hammer & Chisel.
In 2015, Citron and his staff released the Multiple Online Battle Arena (MOBA) game “Fates Forever,” which was initially created to battle the success of League of Legends and similar games. It was well-reviewed, but it didn’t do well in revenues.
Stanislav Vishnevskiy, a game developer in Hammer and Chisel, noticed that most gamers are having difficulties working out gameplay concepts, particularly pointing to problems with the VoIP options available at that time. Some VoIP options required players to provide various IP addresses, while services like Skype or TeamSpeak were resource-heavy and had security issues.
This dilemma eventually led to the idea of developing a friendlier chat program that would cater to gamers. The initial sideline project eventually became the main focus of the entire company to make Discord into fruition.
Since Fates Forever suffered a commercial failure, Citron has to take it off the market and focus on developing the chat program. Discord was born hereon with Citron taking the CEO and Vishnevskiy as the CTO. The company was able to grab fundings from big-time market players, such are Greylock Partners and Benchmark capital who were known to have invested more than $70 million to date.
In May 2015, Discord was officially released to the public. According to Citron, Discord was created out of his passion for video games. Things might have turned a different direction when he suffered mishaps during the early years of his career, but he didn’t quit. Citron said that Discord is here to stay for the long haul and will explore more possibilities in providing excellent service to keep their company strong.
In May 2018, Discord celebrated its 3 years in the playpen with an impressive number of 130 million users.
Discord App Features
Discord utilizes a freemium business model wherein basic services are provided for free, while additional charges are imposed for premium features.
Here’s a list of the main features from Discord you can enjoy for free:
- 100% free communication
- IP & DDoS Protection
- Convenience for PC or mobile use
- Friends List
- Minimal CPU usage
- Low latency
- Smart push notifications
- Custom hot keys
- In-game overlay
- Multiple channels
- Modern text chat
- Direct messaging
Aside from the one mentioned above, many other features were added or updated to the app through the years, some of which are the following:
- Discord StreamKit: In April 2016, Discord released a new page on their website that is geared towards streamers. The page includes all the possible tools and integrations you can add to your Discord server that is associated with streaming, such as Twitch, YouTube, Nightbot, and Muxy. Today, lots of apps have been added including Patreon, GameWisp, OBS, and a lot more.
- Discord Rich Presence: In November 2017, Discord launched this feature which allows easier integration of games and Discord users. The feature will make it easier for players to jump into games with friends, watch and spectate during matches, and send party invites to co-gamers.
Personally, I feel like the software is more of a high-level messaging application for games enthusiasts, which is even better compared to other similar apps like Skype or TeamSpeak.
How Does Discord Make Money?
Aside from being a freeware VoIP application, the company is firm with their stand on not using advertisements on the chat platform (similar to Whatsapp). Discord is also strongly against selling its users’ data because this would mean breaching the relationship between the two parties involved (sigh, Facebook). With that said, you’re probably wondering how this company stays afloat.
To answer that question, here’s how Discord makes use of its monetization strategies:
- Optional Cosmetic Items
Similar to the famous game League of Legends, Discord is also a free application although there are features that are available for purchase, such as sound packs, sticker packs, skins, and custom emojis. These items are optional for users to buy and it doesn’t make a huge advantage on you as a player if you have chosen to purchase these items.
- Discord Merchandise Store
Discord offers a variety of merchandise, including branded hoodies, hats, t-shirts and sweatshirts. The company gains a little revenue from these items which is a delight for its devoted fans.
The company earns from its marketing strategy and its effective way of promoting their product. They don’t charge any amount for using their app, but in return, they encourage their users to support the app by buying their merchandise and cosmetic items to support the company’s operating expenses.
- Discord Nitro
Discord offers a paid option for the app called the Discord Nitro. Discord launched its subscription plan for interested users worth $4.99/month, or $49.99/year. Nitro enables subscribed users to enjoy extra perks, which includes the following:
- Your own Discord tag
- Animated avatars
- Custom emojis
- High-quality screen share. Discord Nitro allows you to enjoy higher resolution (720p or 1080p) screen share in your chat.
- Boosted upload limit. With Nitro, you can share images and files up to 50MB (8 MB for regular users).
- Special Nitro Badge
In October 2018, Discord announced that Nitro will include a growing library of new games that will be enjoyed as added perks by those subscribed to the plan. This added perks would also mean an increase in the Discord Nitro subscription service price from $4.99/month to $9.99/month.
However, loyal fans of Discord who wish to support the platform can still avail the $4.99/month Discord Nitro Classic plan, but without access to curated games.
Aside from getting these features that regular users won’t have, you’re also contributing to the development of the software which Discord highly encourages as a form of support to the growing company.
Discord Receives Support from VCs
Discord announced on December 2018 that the gaming chat startup has secured a $150 million deal in funding at a staggering $2.05 billion valuation. The round was reported to be led by Greenoaks Capital with participation from Tencent, Firstmark, IVP, Index Ventures, and Technology Opportunity Partners.
Most of the funding from various big companies is used by Discord toward international growth and improving Nitro. A small portion goes towards rewarding its pioneer employees.
Discord’s Future Revenue Strategies
Discord has no plans on changing its primary feature, which is the free voice communication service. However, Discord still has to adopt new ways on how they’ll be able to earn money if they want to survive in the market for the long term.
Nitro is a good monetization strategy, but it has many more potentials as a revenue source in the future. These include the following:
GameBridge offers the ease of integrating the app in the game. The feature was made available for free in the first month of its release but was soon rolled back. However, the company assured that it might be back in the future in a different form.
The GameBridge offers the following perks to users:
• Auto-match players in voice channels
• Auto-create permanent or temporary servers for in-game-worlds/guilds
• Screenshots, GIFs, and videos sharing
• Partner-like benefits, where users can build up a community
• Easy control of audio settings
• Positional Audio (Voices in a virtual space to augment distribution of players)
2) Game Revenue Sharing
Discord can seal a partnership deal with game companies in the future. They can earn extra revenue through successful referrals, which means they can receive an amount when users end up purchasing a game or a feature.
Recently, Discord entered into a partnership with Spotify. Users of the app can connect their Spotify accounts on their Discord account. They’ll be able to share what music they listen into their Discord profiles or simultaneously listen to music within a server. Partnerships like this would help the company keep the gamers on their platform.
Perhaps, the company can also expand on other platforms involving arts or the corporate world.
3) Discord is Launching a Game Store
In August 2018, the gaming chat app announced that they are building out a game store. The company initially launched a beta of the game store to 50, 000 users from Canada. Later in October, they made it available for everyone. Now, the chat platform is directly selling games and has added perks of exclusivity for its Discord Nitro subscription users.
Discord, taking more steps forward, has also launched exclusive services on its platform which they called – “First on Discord” games. The company began offering indie games that are only available on Discord for the first 3 months or so after their respective launches.
The gaming chat startup is expected to grow even further in the coming years with its new monetization strategies. So far, it’s currently doing very well, and I believe that they can develop more innovative ways to expand more their service on other platforms.
Safety Concerns with Discord
As Discord continues to grow with millions of new users every week, safety issues regarding the use of the app are also a primary concern.
The ease and functionality of Discord also come with dangers for younger users. In many Discord gaming servers, profanity and abusive language are a standard part of the conversations. There have been issues in the past about the possibility of players discussing “mature” content – sex, violence, and illegal drugs, on the social gaming platform.
Parents, in particular, are also alarmed after an incident in Mississippi of a 14-year old boy who disappeared for four days. Police officials confirmed that they found the young boy with someone he met on the Discord app.
Other dangers concerning the app were also pointed out by netizens, including male and white supremacist groups who can chat on the app anonymously. Back in 2017, Discord was on a hot seat when members of the alt-right who marched in Charlottesville, Virginia for the Unite the Right rally claimed that they used the popular chat platform for gamers to discuss the bulk of their logistic planning and to encourage violence and racism.
The incident was made possible because Discord runs on free servers which can be private or public. Also, a Discord group which can be home to hundreds to thousands of people is only discoverable to people given an invite. The relative privacy and the ease of use of the app, has made Discord an ideal place not only for gamers but also to gather people with a shared interest over any possible category, including offensive and violent actions.
After the Charlottesville attack, where one woman died, Discord barred servers promoting Nazi ideology. CEO Citron said on his statement that Discord’s core mission is to bring people together for gaming and that the company is firmly against any form of violence.
The company has been strengthening its app to prevent such incidents from happening, and it will continue to be aggressive against any kind of action promoting hate and violence.
Discord announces 90/10 Revenue Split in 2019
After announcing in August its plan to build out a game store, Discord followed an announcement in December that they’ll be pursuing a competitive 90/10 revenue split for self-published games this 2019.
Discord is transforming its store into a “self-serve game publishing platform.” With the 90/10 revenue split, any developer can now publish their own games on the store and keep 90% of their revenue. The remaining 10%, on the other hand, will cover operating costs.
Moreover, the company also announced that they’ve garnered 200 million active users on their application as of December 2018, up from 130 million users in May. This means that the Discord game store has a large number of potential customers, which is a very much attractive opportunity to game developers.
Is Discord Making Money?
Perhaps, the question still remains: is Discord profitable?
Discord might be utilizing a freemium business model, but it seems that they’re earning enough money or even higher to operate the company and it can be seen by its amazing record for the past years.
Since it was launched in 2015, the company have attracted the attention of big firms in the gaming market, such as Index Funds and Greylock Ventures, to invest large sums of money on them. The money they receive from funds from big companies alone is already a reflection of how successful they have become.
Moreover, in three years’ time, Discord has grown so much from 25 million users in 2016 to an enormous 200 million active users in December. Discord might be earning only little revenues from cosmetic items, its merchandise, and subscription plans, but they have an extensive scope of audience, more than enough to sustain the company’s operating costs.
Since they’ve been experimenting on new strategies last year, like the Discord game store and the 90/10 revenue split, I think it’s not wrong to say that one can easily foresee Discord’s continues success in their competitive field of market.
Discord is an app built for the convenience of 21st-century gamers. It has all the functionalities in one single app with numerous customization features to suit your likes.
I love the fact that Discord is leaning to the side of game developers. The 90/10 revenue split will favor game developers a lot, mostly to those who are starting up in this field. If it becomes a success, Discord will also benefit a lot from this market plan by securing millions of users on their Discord app.
If you’re a gamer and you haven’t tried out Discord yet, it’s not too late to try this new hype. Register now and start connecting with game players online.
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