HomeTechnologyWhy Microsoft would want to acquire Discord, which is reportedly exploring a...

Why Microsoft would want to acquire Discord, which is reportedly exploring a $10B-plus sale

(Discord Image)

The gaming-focused VoIP app Discord has reportedly put itself on the market, and it’s possible that Microsoft might be the buyer.

VentureBeat’s Dean Takahashi reported Monday that Discord is in final negotiations about a sale with an unspecified buyer, and has been in “lively discussions” with a few others. The purchase price could be well north of $10 billion. Update: Bloomberg reviews that Microsoft is “in the operating” for a deal to acquire Discord.

Discord is a wellliked app used by millions of gamers for low-latency voice chat and other communication. Due to social distancing measures and the general growth of the video game industry, Discord nearly doubled its userbase and saw revenue spike to $130 million in 2020. It was valued at $7 billion in December, and is reportedly is not yet profitable.

The reported asking price places a lot of companies out of the operating to acquire Discord. Facebook would be an obvious candidate, but it’s currently under antitrust investigation, as are other giants such as Amazon, Google, and Apple.

That would seem to leave Microsoft as the last real domestic contender here. It has preexisting ties to Discord, as you can already link your Xbox account immediately to the service; it’s certainly got the money, with $131 billion in total cash as of Dec. 31; and it’s reportedly nonetheless in the market for more gaming-focused acquisitions, even after finalizing its purchase of ZeniMax Media earlier this month.

It does raise the question, however, of just how much more Microsoft can realistically expect to acquire this year before it gets an antitrust suit of its own.

Discord’s ubiquity would make it a strong pick-up for any games writer. With millions of gamers already on the platform, Discord would present a natural goal for marketing efforts and cross-promotion. The flip side, of course, is that Discord’s independence is currently a non-trivial part of its appeal, and a theoretically Microsoft-owned Discord would likely force a significant migration to another platform.

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Any wellliked video game in 2021 has at least 1 Discord community, including Genshin Impact, Valorant, Apex Legends, and Rocket League. (Discord screenshot)

Discord initially launched in May 2015, as an alternative to other contemporary VoIP software like Ventrilo and Mumble. In online games such as League of Legends and World of Warcraft, having a low-impact, low-latency voice chat program is an necessary part of strategies and communication with other gamers, and Discord was designed to address that need.

The program currently also features instant messaging, chat rooms, voice and video calls, Xbox Live integration, and the ability to join up to 100 servers simultaneously. Base entry to the service is free, but clients can pay a subscription fee to join Discord Nitro and achieve several exclusive perks.

As of right now, Discord is nearly inescapable in the gaming space. It takes about a minute to open a new public or private Discord channel for any given topic, complete with voice chat, image hosting, and browser entry. There are specific Discord servers for subjects as granular as how to play a single class in a single MMORPG, or a particular character in combating games like Street Fighter V.

A shaded horse contender for a Discord buyer could be Epic Games, which was recently speculated to be valued at $28 billion. The Fortnite writer, headquartered in Cary, N.C., made headlines earlier this month when it purchased the parent company of Mediatonic, the UK-based developer of last summer’s viral hit game Fall Guys: Ultimate Knockout.

More importantly, Epic has already made a number of lower-key acquisitions in 2021, starting with RAD Game Tools in Kirkland, Wash. Its most recent purchase, Manchester’s Cubic Motion, specializes in facial animation technology. The general theme seems to be that Epic is choosing up smaller companies in order to incorporate their tech into improving its Unreal Engine development toolkit, the latest version of which is scheduled to launch later this year.

While purchasing Discord wouldn’t improve Unreal, integrating its VoIP tech into the Epic Games Store could give that service a boost in its ongoing competition against Valve’s Steam. Discord itself made a quick-lived try at game publishing in 2018, with titles like Last Year: The Nightmare available from immediately inside the app, so teaming up with Epic wouldn’t be much of an general departure.

It’s necessary to note here, of course, that this is nonetheless a rumor, albeit a widespread 1. Discord has been up for sale before, in 2018, and decided to stay unbiased then. It could do so now. If a major company were to buy it, though, that could lead to another seismic shift in the gaming panorama in a period of time that’s already been notoriously shaky.


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