In 2018, we made a video all about how Discord, a free chat service, makes money. But already, in under a year, that video is out of date! In this blog, we’re going to cover how Discord makes money in 2019.
To start, in 2016 Discord promised that they would never run ads on their website or app. Most websites and free services, including social media sites, use advertising as a primary form of revenue. This would be the easy way out, but it is a big relief that Discord does not want to run ads and clutter up the user experience.They have also stated that they are not in the business of selling user data. Despite their terms of service being a bit unclear about user data, and people quoting “if you’re not paying for it, you’re the product”, there is no actual evidence that Discord is selling user data to third parties, and Discord themselves have made it clear they do not want to do that. Because data privacy is such a big deal, we don’t blame you for being skeptical. Overall though, Discord has promised that their core features will always be free and available to anyone.
Discord got their start through money raised from investors. Between 2012 and 2015, Discord raised just under $10 million as part of their Seed Round, Series A, and Series B funding. Then in 2016, they raised $20 million through Greylock Partners. This money was used to expand Discord staff and pay salaries. In 2017, Discord raised an additional $50 million through Index Ventures. In 2018, they raised another $50 million from investors. At the time of that round of funding, the company was valued at $1.65 billion, doubling their previous valuation. In December 2018, Discord raised $150 million, with a $2.05 billion valuation. This round of funding included several companies, but was lead by Greenoaks Capital. All in all, as of the start of 2019, they have raised around $280 million from investors.
Discord Nitro is their premium subscription service, that primarily is a way for Discord fans to help support the program’s development. Nitro costs $9.99 a month or $99.99 for a whole year. This gives some cool perks. You get a custom tag, can have an animated profile picture, higher quality screen sharing, global custom emojis, a file upload size limit of 50 MB rather than 8, and of course a profile badge to show how long you’ve been supporting Discord. With the advent of the game store, Discord Nitro also includes access to over $1000 worth of games, included in your subscription. If you don’t care about the games, you can opt for Nitro Classic, which includes every perk except for the free games. This cuts the price in half, to $4.99 per month or $49.99 for a whole year. It’s unknown how many people have Nitro, but with over 200 million active users at the end of 2018, it’s likely a pretty high number.
Discord recently launched their game store to the public. This is yet another platform to purchase games and play them from. With so many platforms for this already out there, it remains to be seen how successful it’s going to be. Since Discord is aimed at gamers, it’s a fair bet that some people will purchase games through it. The store started out with a 70/30 revenue split. The developer gets 70% of the money from a sale of a game, and Discord gets the other 30%. However, moving into 2019, Discord is opting for a 90/10 split. They have even stated that they want to cut down that 10% even further. That 10% will cover operating costs, but they want to become even more efficient with that. So, the real question is: Is Discord going to make money from the game store? Only time will tell, but it is certainly a way that the company can bring in revenue.
Of course, Discord also sells branded merchandise, and likely takes home some money from this. They currently sell t-shirts, hats, bags, and socks.
Many critics online are worried about Discord’s business model. Like many free-to-use online services, the tool comes before the revenue. Startups rely on venture capital before figuring out how to turn a profit. Twitter didn’t make a profit until 2016, and it was launched in 2006! It survived through the potential that investors saw in the tool. Discord’s profitability may not be readily apparent, and it could be a bumpy ride on the road the success. They have experienced incredible growth over the past few years, so there is a lot of potential. They are always rolling out new features, and as the launch of the game store reveals, they are working on new revenue sources in the background.
Do you support Discord through a Nitro subscription, or in any other way? Let us know in the comments, and let us know about your thoughts and opinions on Discord’s profitability as well.
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