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No annoying ads with Discord and it still makes money

Discord

Big social apps such as Facebook, Instagram, or WeChat rely heavily on ads. Discord hinges its business growth on premium services to users instead of ads

Discord brought in $130 million in revenues in 2020, triple the $45 mn it made in 2019 Discord’s 2020 revenue primarily came from its premium subscription package, Nitro Discord takes a 10% cut of titles that game developers sell through verified servers

Big social apps such as Facebook, Instagram, or WeChat rely heavily on ads. Discord hinges its business growth on premium services to users instead of ads. It likes so much that Discord turned down a $12 bn acquisition offer from Microsoft. 

Being ad-free avoids controversies about privacy and data collection that other social networks have encountered.

Discord CEO Jason Citron says the startup’s unconventional business model has allowed him “to wake up every day and work on things that make our customers’ lives better.”

Even without ads, Discord brought in $130 million in revenues in 2020, triple the $45 mn it made in 2019, and the income was made via premium subscriptions and game distribution.  

Launched in 2015, Discord started off as a text, voice, and video chat platform initially built to help gamers chat and live stream. Discord has evolved beyond its gaming world origins to become the go-to communication platform for a diverse array of online communities.

Millions of people from gaming and non-gaming communities alike use Discord to connect, socialize, and work. Discord saw usage reaching around 19 million weekly active servers and 150 million monthly active users (MAUs) as of July 2021, an impressive rise from 56 million MAUs in 2019.

Discord
Image source: Quartz

Discord users rely on this platform to organize study groups, run meetings, watch movies together, plan community events, and more.  

Discord communities are called servers. Each server contains various text and voice channels where users can chat and share content, with each channel having its own specific focus and rules. Channels allow moderators to manage big communities, moving members into smaller groups instead of having everyone post in one giant thread. 

Most Discord servers are private and invite-only, and starting or joining a server is free. 

According to Discord CEO and co-founder Jason Citron, “There were 1.4 trillion minutes of people having a conversation [in 2020] and 656 billion messages sent in chat. So, the scale that we’re operating at from starting with audio and text in 2015 to now is just massive.”

Discord communities come in all sizes and shapes, with some, like the PUBG MOBILE server, counting more than 546,000 members. The server for the Minecraft video game is even larger, with almost 800,000 players.

Discord integrates with various other apps like YouTube or Twitch and some gaming consoles like Xbox.

Discord money strategy

Discord’s 2020 revenue primarily came from its premium subscription package, Nitro, as well as a mix of various non-ad revenue sources, such as server boosting (offering premium perks for server members) and game distribution fees. 

Subscription packages & server boosting 

Discord’s premium subscription package, Nitro, is available at $9.99 per month or $99.99 per year. With Nitro, users get various perks, including:

  • Custom and animated emojis
  • A custom tag and an animated avatar
  • Two server boosts and 30% off when buying extra boosts

Discord does not reveal how many paying users it has, but some estimates put that figure above 1 million. 

Discord
Image source: Discord

Discord also takes a 10% cut of titles that game developers sell through verified servers.   

In October 2020, Discord rolled out animated stickers that cost between $1.50 and $2.25. Nitro and Classic subscribers get free and permanent access to the “What’s Up Wumpus” sticker pack and can use the “Wumpus Nitro Elite” pack as long as they have an active subscription. Paid members also get a 33% discount on all sticker purchases.

Wumpus
Image source: Android Police

Discord investments

Discord has 350 employees as of May 2021, with 15% of them working on trust and safety teams.

The company is investing in a number of content moderation efforts. For example, Discord has a team of machine learning (ML) experts that build algorithms for detecting suspected child predators and other types of harmful activity.  Discord also purchased Sentropy, a software company that built an AI system for tracking and cleansing online platforms of harassment and abuse, in July 2021.  

Server moderators can also deploy AI-powered moderation bots, powered by the Perspective API. This Google tool analyzes user messages on a server and detects toxic, insulting, and spammy content. Users with too many unwanted messages can be kicked off the channel. 

Discord’s competitors

The company competes indirectly with a range of other tools that offer similar features. These include: 

Steam Chat

Steam Chat is a text and voice messaging service created by video game developer Valve and geared toward gamers. The service boasts 120 million monthly active users and generated $4.3 bn in 2017.  

TeamSpeak

TeamSpeak is a voice and text communication app that’s been around since 2001. Gamers were using it for in-game communication even before Discord rose to popularity. In particular, it targets the e-sports space.

Slack

Slack is a team messaging platform geared toward enterprise use. Launched in 2013, it comes with a clean interface that lacks the “gamer” feel found in platforms like Discord. It was acquired by Salesforce in July 2021. Slack has experienced rapid growth during the COVID-19 pandemic. In March 2020, for instance, the number of concurrent users rose from 10 million to 12.5 million in just 2 weeks. Total revenue in 2020 grew by 43% year-on-year to $903 mn. 

Telegram

Telegram is an instant messaging and video calling app launched in 2013. Often described as a WhatsApp rival, the free app offers a range of features, such as instant chatting, hosting private and public communities, various customizations, public channels, and more. 

Telegram
Image source: Telegram

Telegram boasts 550 mn active users as of March 2021, but the app has yet to generate revenue. The company raised $1.7 bn in 2017 by planning to launch a new cryptocurrency, only to return most of that money to investors after the SEC accused Telegram of illegally selling securities. 

 Microsoft Teams

Microsoft Teams is a communication and collaboration platform launched in 2017 and geared toward professional use. Teams had around 32 million daily active users at the beginning of the COVID-19 pandemic. By July 2021, it reported nearly 250 million MAUs.

Fundraising and evaluation

On September 22 of this year, Discord said it raised $500 mn and is now valued at $15 bn. In December 2020, Discord raised $100 mn in a round that valued the company at over $7 bn.