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Author: Don Obrien

Discord has won over gamers. Now it wants everybody else


First came the gamers, then came the offers for his business.

In recent months Jason Citron, chief executive and founder of gaming-focused chat platform Discord, has rebuffed a series of potential suitors, including a $12bn takeover bid from Microsoft and reported interest from Twitter, Amazon and Epic Games.

“Ever since it was clear that we were starting to be successful, people started to approach us,” the 36-year-old software engineer said in an interview with the Financial Times.

But Citron has his sights on another prize: bringing the niche Discord, whose 150m users mostly use it to chat to one another while gaming, to a mass audience.

“There’s this big trend [of people moving from] broadcast wide-open social media communication services to more small, intimate places,” he said. “We’re a meaningful part of how that’s evolving on the internet.”

Central to this will be wooing Wall Street. According to a recent report by the Newcomer newsletter and one person familiar with the situation, Discord is raising a funding round that would value the company at $15bn. It is also aiming for a public listing, two people familiar with the situation said.

Gamers chat on Discord while playing a game online
User numbers doubled last year, according to Citron, as lockdown restrictions forced many young people to socialise online © Financial Times

Citron declined to comment on Discord’s future capital-raising plans, but added: “We’ll explore whatever option makes the most sense for us.”

Founded in 2015 by Citron, himself a video game developer, today the platform is divided into so-called “servers”, or invite-only interest groups that have their own house rules. Within an individual server, there may be multiple “channels” — multi-person voice, video or text-based spaces — where users can communicate.

The format is esoteric, but mirrors elements of Facebook’s platform as well as those of smaller rivals such as Telegram, Clubhouse, Reddit and Slack.

“We hear a lot from people that the app is hard to learn [how to use]. So we’ve spent a lot of energy on making it easier,” Citron admitted, adding that efforts had been made to strip some of the niche gamer parlance from the app and marketing materials.

Discord has been gaining popularity among the edgy retail trading communities that drove the fervour around “meme stocks” earlier this year, as well as cryptocurrency enthusiasts and music lovers.

“If you can imagine people having their own invite-only dorm room or café, Discord is like the digital version of those third places,” Citron said.

User numbers doubled in 2020, Citron said, as gamers brought non-gaming friends on board and as lockdown restrictions forced its entertainment-starved demographic — mostly 13 to 24-year-olds — to socialise mostly online.

The company has also been well placed to scoop up those users quitting Facebook over privacy concerns, particularly as Citron has dismissed advertising as a business model in favour of offering its users premium features for a fee.

But Citron is now tasked with establishing the delicate balance between holding on to its longstanding gaming community while wooing less tech-savvy users. The company recently launched its first brand campaign — called “Imagine a Place” — last month with a short film starring Danny DeVito.

Revenues tripled to $130m in 2020, Citron said, confirming an earlier report by the Wall Street Journal. Currently, users can spend $9.99 a month or $99.99 a year for its premium subscription, Nitro, which adds exclusive emojis, animated avatars and higher video resolution. 

Actor Danny DeVito in the ‘Imagine a Place’ brand campaign
Danny DeVito in the ‘Imagine a Place’ campaign © Discord

Citron insists that the perks are attractive to non-gamers as well as the gaming community, giving those who love the platform new ways to express themselves.

The model has won over some analysts. “Subscription is the nirvana; predictable, recurring, less sensitive to economic downturn,” said Brandon Ross, media and technology analyst at LightShed, and a general partner at its venture arm. “They’ve already started to build a pretty robust subscription business.”

But Citron is also exploring other revenue streams. Like its peers, the company is weighing ways to help influencers and creators to make money from their fans more directly, while taking a cut of any earnings.

In May, it launched a “Stage Discovery” feature where businesses or creators can list public events and it is piloting ticketed events. Musician Grimes used the new Stage feature to tease an unreleased song to 100,000 fans on her server, called the Grimes Metaverse (Super Beta).

Discord is also developing several of its own games in-house as a “small experiment”, Citron said, adding that the hope is that users make purchases within the games, allowing the company to take a fee. 

So far, the company has attracted numerous potential buyers. According to Bloomberg, talks with parties including Amazon and Twitter have valued Discord at up to $18bn. Asked about whether there had been more bids for the company since the report, Citron declined to comment.

Discord’s future may lie less in acquisitions than in more equitable tie-ups. In May, Sony’s PlayStation announced it had taken a minority stake in the company, in a partnership in which Discord will connect into users’ consoles from early 2022. “We’ve been talking to all the console manufacturers,” Citron said.

But Discord increasingly faces stiff competition from larger, deep-pocketed rivals such as Facebook, which is known to clone its competitors’ features. It is also grappling with security challenges, after cyber researchers last month found that it was a hotbed for the spreading of malicious links.

As the platform scales and regulators circle, it must also address concerns that it hosts an under-moderated “wild west”, with critics arguing that its up-all-night gaming culture, popular among teenage boys, is awash with toxic content.

“This kind of normalisation of harassment in gaming culture does get translated into the real world,” said David Sifry, vice-president of the Anti-Defamation League’s Center for Technology and Society, adding that Discord’s moderation was patchy and in need of more resources. “They have a lot to improve.”

Unlike many of its rivals, Discord scans users’ messages proactively only for the most egregious content, such as child sexual exploitation. But it is stepping up its efforts, Citron maintains, and last month bought Sentropy, a start-up that makes AI-powered software to detect and remove online harassment.

“Discord is the thing that we’re helping alleviate in your life, if you use our service,” Citron said. But, he added: “[Safety] is a daily effort on our part and we can always do better.”

Additional reporting by Miles Kruppa



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