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How Does Discord Make Money: Explanation of Business Model

Every day, it seems like there’s a new gaming platform being launched or a new space for messaging and networking with others who have similar interests. Enter Discord, a gaming platform that provides free services for users to communicate over voice, chat, and text – and doesn’t display any ads. The questions arise: how do they stay in business and make money? So, then, how does Discord do it?

Revenue Streams

1. Premium Features and Server Boost: Discord Nitro
Like other platforms, they do so through selling premium features and services to their users. While someone could legitimately gain full access and never pay a cent, there are some elements of the system that you can pay for.

Discord Nitro is the “premium” subscription that allows users to upgrade to higher tiers and thereby gain faster service, higher notifications to others, greater personalization with your account and avatar, increased bandwidth, and more. If you are a frequent user or anticipate spending lots of time and resources using Discord, this might make sense to purchase. It can be seen as a status symbol, which can be desirable in gaming circles.

2. Premium Features: Discord Nitro “Classic”
There is a less expensive version of the Discord Nitro premium services called Discord Nitro “Classic.” The Classic version offers the base chat perks of Discord Nitro without a server boost.

In some ways, this moves Discord into the “freemium” model that has dominated the gaming marketplace in the past few years. Under the “freemium” model, the base experience is free to all users, including most elements of a game or system and the vast majority of game features. However, users are free to purchase higher membership tiers or purchase additional features or products within the game.

3. Game Distribution
If you are a game developer, you can test and release your games on Discord as well. Discord is very open in allowing developers to host their games on the system, giving users new and exciting avenues for entertainment and engagement. Discord is generous in their partnership terms with gamers – they take a minimal percentage of the revenue from game sales. However, every little bit helps, and this does count as a revenue stream for the platform.

4. Merchandise
Gamers are known for buying merchandise related to their favorite games, fandoms, and more, and Discord is no different. Loyal users spend money on merchandise related to the platform, including clothing and accessories. This is a real-world status symbol that lets others know what system they use; promoting one’s chosen gaming platform is a point of pride for gamers, and this is an excellent marketing tool for Discord as well.

5. Skins & DLC
Another “freemium” feature that is common for gaming platforms is the purchase of various kinds of downloadable content (DLC). One common type of DLC is “skins,” or customized graphics and outfits for characters within the game. Skins can include costumes, accessories, weapons, or otherwise different and improved versions of a character. This kind of content not only allows the user to personalize their avatars and characters, but it also gives them the chance to play using their favorite versions of the character. It may not change the functionality of the game or the abilities of the character, but this is a common practice across games and platforms. This can be seen as mere escapism or wish fulfillment, but it is an important part of gaining a “complete” gaming experience.

Beyond the game characters, users can enhance their personal avatars on the platforms as well. Stickers, premium badges, and other personalizing elements may be purchased to show involvement in a group or just for fun. This is another common practice, and users will freely purchase items like this to show their status or for pure enjoyment.

6. Other Channels for Revenue
There are other revenue channels that will likely develop in the future. Increased collaboration between Discord and developers will mean that more and more games will be released on the platform, and some may be exclusive to Discord or to certain subscriber tiers. This kind of partnership will increase the revenue potential both for developers and for Discord, since the exclusivity will lead to additional purchases from those users. Enhanced revenue-sharing contracts will also lead to new and growing revenue streams for the platform as well.

7. Expansion Beyond Gaming
With the $100 million cash raise in June 2020, Discord announced that it is expanding its offerings and is becoming more of a tool for day-to-day communication. During the Covid-19 pandemic, this gaming chat app has attracted teachers, coworkers and others to its service to connect with each other. There is some evidence to support that Discord is aiming to become a fully-fledged office space alternative with office rooms for team collaboration, text channels, and three-way channels.

8. Cash Infusions
While not quite a “revenue” source in the purest sense, Discord has received cash infusions totaling $379.3 million in outside financings through 18 different investors. As recently as June 2020, Discord raised $100 million in funding. When Discord was first launched, it received funding and has continued to receive cash injections. While most businesses move into a more self-sustaining status more quickly through ad sales or other customer-centric revenue streams, this type of funding seems to be a mainstay for Discord. The creators have stated from the launch of the product that they wanted to provide a free, no-ad experience for their users, and so far, they have held to that promise. Users that may be fed up with similar experiences elsewhere have happily moved to Discord, and loyalty to this user-focused brand creates goodwill that has led directly to revenue generated from higher memberships and premium content.

Here is the most recent video on how Discord makes money (it was updated in 2019):

Need to Understand Discord a Little More?

Discord users access the platform to house their online games and to communicate in networks with other gamers. Users can manage their profiles online and connect with others through a variety of channels, including voice, video calling, chat and instant messaging, text, and file sharing. These features make it comparable to other services like Skype, but the main difference is that Discord does not charge its users any fees to access the base features. In this way, it is much like Facebook or Twitter in that the main platform is free for everyone.

This ad-free experience is refreshing in an environment where most online platforms are dominated by advertisements and promotional gimmicks. The major social media platforms (Facebook, Twitter, Instagram, etc.) have turned into giant marketplaces for companies big and small, and much of the revenue for these services is generated through the sale of advertisements from companies hoping to gain or keep customer bases of their own. Most mobile games also rely heavily on ads so that they can be released for free, and removing ads will cost users a fee, along with special features and abilities within each game.

Discord, then, seems to be the best of both worlds. It gives users access to an uncluttered, safe, and secure environment – with no annoying ads popping up – where they can play new and exciting games, connect with other users, build groups and networks with those that share their interests, and all for free. This is a perfect combination that many gamers crave, and the growing user base for Discord shows that they have hit the sweet spot for their target market.

Conclusion

Discord may not follow the traditional path for an online gaming platform, but the strong focus on the experience of the end-user has paid dividends both literally and figuratively. By keeping the customer front and center and providing the kind of experience they demand, Discord has built up a loyal customer base that willingly pays for premium features without being forced or tricked into doing so. Their current revenue channels will likely grow in the future, and new opportunities should also arise to enhance the platform even further.

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