Discord is a free chat program designed for gamers. It allows you to chat with other players in your game and includes voice chat, text channels, and the ability to share images and videos.
So how does Discord make money?
There are two ways that it makes money: (1) by selling Nitro, a premium membership that offers features such as animated avatars, larger file uploads, custom emojis, and higher quality screen sharing; and (2) by allowing their partners to sell games on their platform through affiliate links.
What Is Discord?
Discord, a San Francisco-based startup, was born from a secure chat for gamers called Megathread.
It was launched in 2014 by former PayPal employees. Discord was developed in-house from the ground up and started as an alternative to Skype for gamers.
Last November, it announced game streaming company Cerevo, which allows gamers to play games in-browser with Twitch-like interactivity.
The social network now has more than 250 million registered users and generates over $2 million in revenue each day. Discord is an open network for gamers.
On it, users can play games together or message one another. They also voice chat. The app has additional features such as a unified text chat, voice and video call, and voice chat filters.
The Company’s Business Model
Discord differentiates itself from other gaming-related apps in several ways. Most notably, Discord doesn’t require any setup or subscription fee to use its service.
The app is available for free download on most platforms. This has helped the company attract millions of users across the world.
In October, the company counted 30 million monthly active users, up from 15 million in January. The company counts 100 million registered accounts, up from 20 million in June 2017.
The company doesn’t publish any profit and loss statements. However, its adoption rate and the number of active users indicate that it has managed to bring in revenue from some sources.
Discord Deals Discord has made a few notable deals to boost its user numbers.
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The Nitro Package
Discord originally launched a package for its video chat service called Chat Plus.
This included several other features previously included with other Nitro-enabled chat apps like Discord and Skype. One of the key additions of Chat Plus was streaming, so users could share the video of what they were doing in their chat.
The service was initially free. But the next year, Discord revamped Chat Plus with new options for paid users.
Players could pay for each other’s in-game resources, which would then grant access to new cosmetic items.
Players could also buy champions for their team, which would act as leader boards and achievements for every member.
Other Revenue Sources
While revenue from Nitro is free, Discord partners with advertisers to monetize its user base.
This has become a lucrative part of the company’s revenue. According to CNBC, there was a spike in revenue following removing advertisements from its platform.
This is likely due to a change in Discord’s referral program. As mentioned, Discord doesn’t necessarily take a cut of the revenue made via its products, but it does share some of it with third-party providers.
This structure means the company can retain a portion of the money. Notably, Discord never even patented the technology it uses to broadcast messages, photos, videos, voice, and games.
This has allowed the company to build on its technology to stream other content — like PC gaming — directly on its platform.
Discord announced it was developing a premium tier of its service in June of last year.
The new level would be called Discord Plus. It was meant to be in line with other premium gaming services and provide additional features to users.
According to the company, Discord Plus would offer: An in-client presence for easy chatting More customization options for your messages Instant switching between mobile and PC mode A tool for live streaming directly from Discord Plus was meant to cost $5/month per user.
However, the company has since changed its mind and currently offers Discord Plus at no cost to users.
At the time, CEO Jason Citron explained why Discord decided to make the change. He said that Discord Plus was supposed to be “a full Discord experience on mobile.
In 2017, Discord came up with a clothing store on its site to sell merchandise.
So far, this hasn’t turned out so well. “Discord earned a considerable amount of revenue from our sales,” the company wrote.
“In the first quarter of 2017, it accounted for 22% of our revenue.
The apparel store was closed in September 2016.” Lanner compared the sale of Discord merchandise to Pokémon, calling the Pokémon Marketplace one of the biggest failure stories in the history of e-commerce.
Lanner didn’t specify the exact revenue figures for Discord merchandise, but he told the team to “think big and bold” as it planned its merch store. “It was a risk, but it could have been a big success,” Lanner said.
Discord’s growth has been impressive. But like any tech company, it’s only in the early days.
In the coming months and years, the company will have to determine the right amount of resources to invest in the growth of its core product.
If the service manages to make big bucks and creates an enduring community, its current valuation of $5.5 billion could end up looking like an absolute steal.
In the meantime, investors will keep watching for more details on the company’s plans.