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Discord Business Model: How does Discord make money?

Executive Summary

Discord techydeed.com

Discord, a communication platform that allows gamers and everyone else to create so-called servers, is a communication tool. Discord is available for Android, iPhone, Mac and Xbox.

Discord earns money through its Nitro subscription plans. Discord also makes money from its Nitro subscription packages.

Discord was founded in 2015 and is headquartered in San Francisco. It quickly rose to be one of the most popular chat apps in the world. Discord now has over 100 million users and is spread across 6.7million servers. __S.14__

What is Discord?

Discord is a chat app that’s specifically designed for video game players. Discord supports voice chat, text, and video calling. It is available for Android, iPhones, Macs, Xbox, PlayStation, PC, and other devices.

Discord lets its users organize themselves into communities, also known as Discord Servers. __S.28__ These servers contain many channels that can be used to coordinate and discuss different topics.

One user can only join up to 100 servers. While public servers can be accessed through a link, private ones require approval and invites. Five hundred channels are the maximum allowed for any server.

Discord allows users to chat directly with one another if they are sick of group chats. Conflict can also be integrated with other platforms like YouTube, Spotify or GIPHY. This allows users to share content from third parties on Discord.

Discord isn’t just for gamers. Communities can use conflict to organize events and discuss any topic.

According to the company, over 100 million active users spend approximately 4 billion minutes interacting with 6.7 million servers.

A Brief History of Discord

Discord is headquartered in San Francisco and was publicly released in 2015. It was founded in 2015 by Jason Citron (CEO) and Stan Vishnevskiy (CTO).

Before starting Discord, both founders had worked in the gaming industry. OpenFeint, a mobile platform that allows social gaming to be done on the go, was sold by Citron at 26 years old to Japanese game maker GREE. The transaction totalled $104 million. It had only been two years since its inception.

Vishnevskiy has a much better gaming record than the founders. He woke up at 5 a.m. every morning to play Final Fantasy XI.

He soon became so skilled that he quickly assembled a team consisting of 40 players, which eventually became the highest-ranked game team. Vishnevskiy created a few software tools that allowed the team to organize themselves better. This was a crucial part of their success.

The tools were then packaged and sold to a company. He decided it was time to find a job. He worked for several startups in the Valley before mutual friends introduced Jason Citron to him.

He joined the Hammer & Chisel gaming studio in 2013. It had just been launched, Citron. The studio’s flagship title, Fates Forever, was introduced at TechCrunch’s Disrupt Conference. This iPad exclusive game was a three-versus-3 arena game. Its core functionality was very similar to League of Legends.

The game was made available to the iOS Store by Apple on July 3 rd 2014. Fates Forever were critically acclaimed but never saw widespread success. In October 2015, Fates Forever and its community webpage were closed.

Vishnevskiy’s knowledge of developing communication tools for gaming was a huge advantage for the founders. Fates Forever were already built with chat and social networking features. The team decided to move their business in this direction.

Applications like Ventrilo and TeamSpeak were dominant in the videogame communications market at the time. All of these platforms shared one thing: they were cumbersome and difficult to use.

A third-party vendor would be the best option as players will need to rent a server and pay a monthly rental fee. This is usually a company with a poor reputation. They would also need to send an email with the IP address to their friends, which would allow them to download another app. These apps’ designs would often be confusing and out of date.

History has shown that disrupting an industry with incumbents who are only interested in collecting money and not innovating is often a way to disrupt quickly. Zoom is a video communications app that has taken over the world. It has also done something similar in the industry.

The Discord team began work in January 2015. The first version of Discord was released to the public five months later. The app’s simplicity, low friction and intuitive design were what attracted gamers’ attention. However, Discord’s feature-rich app was completely free of charge.

The platform attracted gamers from all parts of the globe almost immediately. Within a little more than a year, the company had over 25 million users. The company raised venture capital over the next few years to sustain operations and offer its core product free of charge.

Discord also understood the importance of listening to its users and capitalizing on influential people in its target industries. Conflict, for example, launched its Verified servers in 2018 with the help of various eSports teams.

These servers are a badge of authenticity, similar to Instagram or YouTube verified accounts. Teams can use these servers to communicate with each other during gameplay and interact with fans or organize events together.

It has also partnered up with Spotify and other companies to host third-party content. Discord teamed with Tencent in 2019 to host PUBG (PlayerUnknown’s Battlegrounds) live tournaments.

Like Mike Rose of RageSquid’s Descenders, other users used Discord to grant gamers access to beta and alpha versions, new content, and other features. This audience then brings in others through word-of-mouth, which further accelerates Discord’s growth.

Unfortunately, the founders were not as optimistic as they had hoped. Discord was forced to close down many servers linked to racial discrimination and terrorism over the years.

Discord responded by implementing security measures. Discord hired many people to form a trust-and-safety team that now accounts for 15% of its workforce. This is in comparison to Facebook’s pledge to dedicate 20% of its employees to content moderation.

Other measures include a 24/7 customer service team and automated systems that continuously monitor and filter unwanted activities. There are also clear guidelines for the community, which, if broken, can result in an immediate ban.

These safety measures are part of Discord’s plans to expand beyond its gaming-centric user base and make Discord a communication tool accessible by the wider public. This plan appears to be working so far.

Discord has over 100 million users. Conflict can be used by many groups such as teachers and boy scouts. The company employs over 750 people in its San Francisco office.

How does Discord make money?

Discord’s core product, as stated previously, is entirely free to use. This allows Discord to sign up users in a short time.

It had to figure out a revenue model, just like every other company. Discord’s so-called Nitro package was introduced in 2017. In the years that followed, other sources of income were also available.

However, not all of the company’s initiatives have gone as planned. Two years after its inception, the company closed down its merchandise shop, selling Discord-branded clothing.

Startups experiment with different revenue models, and some work while others fail. Discord currently generates revenue through three sources of income. We’ll discuss these below.

Nitro

Discord offers Nitro a premium subscription package. Discord Nitro costs $9.99 per month or $99.99 annually. Nitro Classic is a cheaper version that costs $4.99 per month or $49.99 per annum, respectively.

These premium features are available:

  • Personal profile with animated avatar and custom tags
  • Create your own custom Emojis
  • Get two server boosters and a 30% discount (more details later).
  • Upload files up to 100MB (free limit 6MB).
  • High-resolution video, screen sharing, and Discord Go live streaming.

You can test Nitro free of charge for the first 30 days and cancel at any time. This is similar to Netflix’s model, which emphasized a frictionless user experience and pricing flexibility similar to Nitro.

Gaming Sales

Discord’s game store was launched in 2018 to compete with Steam. The game store gave Nitro subscribers access to Discord-exclusive Discord games like Dead Cells and Into The Breach.

It was closed within a year of its launch. Discord quickly adapted to a new model that partners with game developers who sell their games only on their servers.

Developers first need to verify their servers before they can get started. Discord will then promote the game and the server on its platform, giving developers the exposure they need.

Discord earns money every time a game is purchased from its servers. Conflict takes a 10% cut of every sale. The clash will get $1.49 if a game is sold for $14.99.

Server Boosting

Server Boosting is a way for communities to increase the functionality and performance of their Discord Server. There are three levels of server boosting available. These include the following perks.

Server boosts cost $4.99 per month. Nitro subscribers will get a 30% discount on the server boost, as stated above. Two users must pay the subscription fee to unlock Level 1. Level 2 is a requirement for 15 increases; Level 3 requires 30.

All server members can access the premium features, regardless of whether they pay for them.

Discord Funding, Valuation and Revenue

Crunchbase reports that Discord raised $479.3 million in 11 rounds of venture capital funding. Spark Capital, Tencent (creator of League of Legends, PUBG and others), Index Ventures. Benchmark, Accel. General Catalyst and many other investors are notable investors.

Discord’s most recent funding round was announced in December 2020. It was valued at $7Billion. This is a 100 per cent increase over the $3.5 billion Discord had been able to acquire in July 2020.

Forbes projects. Discord will bring in $120 million annually by 2020, increasing the $70 million it earned the previous year.

Who owns discord?

Discord, a privately owned company, is not required to reveal ownership numbers to the public. Given his $104 million exits, Citron was most likely to raise on favourable terms. He and Vishnevskiy should be the majority shareholders in the company.

Benchmark, the institution’s lead Series-A investor and participant in successive rounds, will likely be one of the largest shareholders.

Once Discord files for public disclosure, it will be able to reveal the exact ownership stakes. No plans for an IPO are currently known.

Also Read: Tyrone’s Unblocked Games: Top Latest Games

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