Discord makes money in several ways, from its Discord Store, where users can buy premium games, to the seller shops, which primarily work with a 90/10 revenue share for developers and game sellers. And sellers can get more visibility on the platform by adding features to the game visibility.
|Business Model Element||Analysis||Implications||Examples|
|Freemium Model||Discord operates on a freemium model, offering a free tier with basic features and a paid subscription called “Discord Nitro” that provides additional perks and customization options.||This model attracts a large user base with free access while generating revenue from premium subscriptions. It encourages users to upgrade for enhanced functionality.||Discord’s free tier allows users to create servers, engage in voice and text chats, and share multimedia content. Discord Nitro offers premium features like animated avatars, custom emojis, and higher quality video streams for a monthly fee.|
|In-App Purchases||Discord offers a virtual currency called “Discord Nitro Classic” and “Discord Nitro” for in-app purchases. Users can use Nitro to boost their servers and enjoy enhanced perks.||In-app purchases provide an additional revenue stream and encourage user engagement. Boosting servers enhances server visibility and features, fostering a sense of community.||Users can purchase Nitro and Nitro Classic within the Discord app to support their favorite servers and gain access to server boosts, which improve server capabilities and unlock various cosmetic benefits.|
|Game Distribution Platform||Discord has expanded into game distribution, offering a curated selection of games for purchase. It integrates gaming features like voice chat and screen sharing into its platform.||By entering the gaming market, Discord can diversify its services and engage with the gaming community. It encourages gamers to use Discord as a hub for communication.||Discord provides a platform where users can discover and purchase games, and it offers a “Go Live” feature for streaming gameplay directly to their servers. The built-in voice chat and screen sharing enhance the gaming experience.|
|Partner Program||Discord has a partner program that provides exclusive features to verified server owners. Partners can access advanced server customization, early access to new features, and other perks.||The partner program incentivizes server owners to maintain active communities and helps Discord identify and promote popular servers. It fosters a sense of prestige and recognition.||Discord partners, who run popular servers with active communities, gain access to a range of exclusive features and early access to new tools. This encourages server growth and attracts influencers and content creators to the platform.|
|Integration Ecosystem||Discord offers a variety of third-party integrations, including bots and apps, to enhance server functionality. Developers can create and distribute these integrations, often monetizing them.||The integration ecosystem enriches Discord’s functionality and caters to diverse user needs. It allows developers to generate revenue by providing valuable tools and services to server owners.||Users can add bots and apps to their Discord servers, such as music bots or moderation tools, to enhance their server’s capabilities. Developers often charge fees or use subscription models to monetize their integrations.|
|Custom Emoji and Stickers||Discord allows users to create custom emojis and stickers, which can be used in servers. It offers a marketplace where users can purchase and sell these user-generated digital goods.||Customization options encourage creativity within the community and provide a marketplace for user-generated content. It can lead to additional revenue from emoji and sticker sales.||Users can design and upload custom emojis and stickers to use in their servers. Discord offers a marketplace where users can buy and sell these digital assets, often with in-app purchases or premium currencies.|
|Advertising and Partnerships||Discord has explored advertising and brand partnerships as a potential revenue stream. It may display sponsored content or collaborate with brands for promotional campaigns.||Advertising and partnerships can generate significant revenue for the platform while providing brands with a way to reach a highly engaged user base. It should be balanced to maintain user experience.||Discord could partner with brands for server events, offer sponsored server themes, or display targeted advertisements to users, provided it ensures that such activities do not disrupt the user experience.|
|Value Proposition||Discord’s value proposition centers on providing a versatile and user-friendly communication platform for communities, gamers, and teams. It offers text, voice, and video chat, screen sharing, and robust customization options. Discord fosters a sense of belonging, engagement, and collaboration among its users.||The value proposition positions Discord as an essential communication hub for diverse groups, enhancing connectivity and collaboration. The platform’s features encourage user loyalty and retention.||Discord offers a one-stop solution for communication and collaboration, emphasizing features like voice channels, screen sharing, and custom emojis. It caters to gamers, communities, and teams seeking efficient and engaging communication tools.|
|Customer Segments||Discord’s customer segments include gamers, content creators, community organizers, students, professionals, and teams across various industries. It serves individuals and organizations seeking efficient and enjoyable communication.||Diverse customer segments broaden Discord’s user base and revenue potential. Customization options and server features cater to the unique needs of different user groups.||Discord attracts gamers looking for voice chat during gameplay, content creators who engage with their audience, communities seeking a shared platform, and professionals and teams in need of efficient collaboration tools.|
|Distribution Strategy||Discord primarily distributes its platform through digital channels, offering downloads on its website and app stores (iOS, Android, and others). It relies on word-of-mouth, user recommendations, and integrations with gaming platforms to expand its user base.||Digital distribution ensures global accessibility, while integrations with gaming platforms enhance visibility among target audiences. User recommendations and partnerships drive adoption.||Users can download Discord’s desktop app or mobile app from its website or app stores. Gaming platforms like Steam also integrate Discord for in-game communication, facilitating user acquisition among gamers.|
|Marketing Strategy||Discord’s marketing strategy involves community engagement, content marketing, influencer partnerships, and sponsorships. It leverages its own platform to connect with users and emphasizes user-generated content. Discord encourages server owners and users to promote the platform organically.||Community-centric marketing builds brand loyalty and trust. User-generated content and influencer partnerships boost brand visibility. Sponsorships allow Discord to support popular communities.||Discord engages with its user base through its own platform, encouraging users to create and promote their servers. It collaborates with influencers to showcase its features and occasionally sponsors server events or competitions.|
|Competitive Advantage||Discord’s competitive advantage lies in its feature-rich platform, community-driven ecosystem, and focus on user engagement. Its versatility in offering text, voice, and video chat, along with integration with gaming, sets it apart. Discord Nitro provides additional customization options and server boosts, enhancing the user experience.||The platform’s versatility appeals to various user segments, while its community-focused approach fosters user retention and growth. Discord Nitro offers unique customization options and server-enhancing features.||Discord stands out by offering a comprehensive communication platform that bridges text, voice, and video chat seamlessly. Its vibrant community-driven ecosystem and the ability to boost servers make it a valuable tool for gamers, communities, and teams alike.|
As he recounted, one of Jason Citron’s first encounters with anything close to a gaming console was the NES (Nintendo Entertainment System).
He played Super Mario Bros thinking it was the most amazing thing he had ever seen.
A self-taught coder by age 13, he learned to code by developing small games.
As he grew, he kept playing any sort of video game, from Final Fantasy VI to Earthbound.
He spent hours and hours playing video games.
He was inspired by his grandfather, who ran one of the earliest electrician consultancies in the 1900s, and his father’s entrepreneurial roots.
Jason started fixing computers to earn money at the age of 13-14, when he would drop by the homes of elder people to explain to them how computers worked, from basic games to chat functionalities.
At 16, he figured he could get paid to write code for their websites, which became a real side hustle, which Jason brought on for a few years as a solo business.
The first company as an entrepreneur
Indeed, Jason Citron spent a few years as a game developer, working for other companies.
In this incubator, he had the chance to focus full-time on developing games to build a business.
As he worked on developing a new game for YouWeb, that turned into a game called OpenFeint, a combination of role-playing-game and puzzles.
As Jason Citron recalled:
“This all happened in 2007/2008 when the mobile gaming landscape was totally different from how it is now.”
In short, suddenly, the iPhone had transformed the gaming experience.
From dumbphones to smartphones, the iPhone turned those mobile devices into gaming consoles.
From game to platform
OpenFeint would transition from a game to a social gaming network.
In the meantime, as it launched games like Aurora Feint and Tower Puzzles, the company had over a million players, but none was paying.
Then one day, brainstorming what to do with the technology built around OpenFeint, Jason Citron and his co-founder realized that mobile devices were still missing a similar mechanism to Xbox Live, which enabled players to interact and play together.
As they realized that they had built this technology as they built the first games, they transitioned OpenFeint into a social gaming platform, which would eventually take off so much that it had, by 2008, 75 million registered users.
The OpenFeint software development kit was free, so the company made money via revenue sharing, mobile storefronts, and game features.
That is how OpenFeint transitioned from games to becoming a social gaming platform that later on would become successful in China and be acquired in 2011 by a Japanese gaming company for $104 million in cash plus additional growth capital allocated to grow OpenFeint further.
A cross-platform strategy to thrive, yet Apple came as the main competitor
At a certain point, OpenFeint thrived when Apple launched its own Game Center as a direct competitor.
Starting over: the failure that brought to Discord
With the money from the OpenFeint acquisition, Jason Citron built a game development studio, Hammer & Chisel, which would launch other Fates Forever, which Citron defined as “one of the first serious MOBAs on the iPad before Vainglory.”
And yet, it never became commercially successful. By 2015, however, thanks to the learnings in developing Fates Forever, Citron and his team had realized that “voice and text chat on mobile hasn’t really advanced over the past decade” and that there wasn’t a “reliable and secure way for teammates to communicate when playing team games.
From there, Discord was built, and the rest is history.
Discord’s mission, vision, and core values
“To bring people together around games“ this is how Discord announces its mission, and it further articulates: “Discord’s free voice and text chat is about making it easier for you to spend time with the people you care about, create these memories, and land a headshot or two.”
Discord is founded
Discord was released on May 13, 2015, with Citron and Vishnevskiy starting the platform so that friends could communicate whilst playing online games. Both men, as we touched on earlier, shared a love of video games and cherished the friendships they had made with others.
Citron later noted that the pair had no intention to attract a specific target audience, but nevertheless, some gamer subreddits readily replaced links for IRC (Internet Relay Chat) with Discord links.
Discord was immediately loved by people around the world, and, to some extent, benefitted from associations with popular Twitch streamers.
While existing tools were slow, complex, and unreliable, Discord made it easy to participate in the conversation. Users could hop between text, voice, and video, and also stay in touch with various communities.
Later, Discord transitioned from a tool for gamers to a tool for everyone. According to the company’s website, it “is used by everyone from local hiking clubs, to art communities, to study groups” with many spending upwards of four hours per day on the platform.
How does Discord make money?
Back in 2015, when Discord was launched, asked how it was going to make money, Jason Citron replied:
Our plan is to keep the functionality — the core usability — free. So everything you’re using right now will stay free. Voice, text, mobile, all stay free. Almost all the new features will be free. Deep integrations and overlays and slash commands and bots — all free.
And he continued:
Our plan is to sell optional cosmetic things. One example is what Stan just mentioned: TTS features like selling voice packs. Something like the Unreal Tournament announcer packs. Selling themes, sticker packs, fancy elaborate emoji, sound packs, different sound effects, etc, are still up in the air but it’s what we’re planning to do.
The round also valued the company at $2.05 billion.
Xbox Live support and Discord Store
On April 25, 2018, Microsoft announced that Discord would be available to Xbox Live users in the near term.
General Manager Daniel McCulloch confirmed that the move was in response to player feedback, with users able to link their Discord and Xbox accounts.
By October 2018, Discord launched its store in Beta, giving the possibility to 50,000 users in Canada to purchase premium games.
TechCrunch reported that the capital from the aforementioned funding round would be used to take on major competitor Valve and its ubiquitous games store Steam.
After the initial release in Canada, the company noted in October that it would be made available to users worldwide.
Curiously, Discord’s move to establish a store more or less coincided with Valve’s overhaul of the Steam chat system.
The store only sold 20 different titles initially, with the company wanting to reframe it as somewhat of a ‘local bookstore’ of titles. In other words, if a particular game was featured on the shelf, it had Discord’s stamp of approval.
Discord’s store was also more attractive to independent developers in that it offered a 90/10 revenue split compared to Steam’s 70/30 arrangement.
Server templates and rebranding
In March 2020 as the COVID-19 pandemic started to take shape, Discord introduced server templates that could be used to create new servers. The pre-configured templates contain roles, permissions, channels, and other settings which enable users to save time and hassle.
To reflect the platform’s growing popularity in non-gaming niches, the company announced in June 2020 that it would be marketed as general purpose communication and chat client for any function or purpose.In practice, this involved the unveiling of the new slogan “Your place to talk” and a revised website. Discord also planned to reduce the prevalence of gamer jargon and in-jokes and increase the capacity and reliability of its servers.
Discord Seller Shops
As of today, sellers can also set up their store and start selling through Discord:
Some of the features of the seller shop comprise:
- Sell directly to superfans inside the server and customize the storefront.
- 90/10 revenue share on sales.
- Ability to run private alphas or betas using Discord role-system.
Rich presence: advertising for sellers on the platform
Another monetization mode is that of giving visibility on the platform to game developers through:
- Viral Exposure by adding art and detailed information to amplify the game even more.
- Send Party Invites Messages to amplify the launch of games.
- Launch Game In A Party, which enables you to request an invite within Discord.
- Launch Game’s Spectate Mode, which adds a spectate button to a player’s profile so any of their friends can watch in one click.
- Using the funds from a previous social gaming platform Jason Citron launched a game development agency, which developed another unsuccessful game. Yet from that failure, Jason Citron started Discord.
- Discord is mostly free and backed by venture capital. However, in 2018, Discord began experimenting with its premium store to enable users to purchase premium games.
- Discord also experimented with the seller store, enabling developers to build their game stores on top of Discord and start selling them.
- Also, Discord experimented by giving visibility to stores on the platform through a set of paid services to enhance the games’ visibility.
- Jason Citron’s Background: Jason Citron, the founder of Discord, was drawn to gaming from a young age and taught himself coding. He began as a game programmer and later joined an incubator, where he developed OpenFeint, a social gaming network.
- Transition to Social Gaming Platform: OpenFeint transformed from a game to a social gaming network, offering services and revenue sharing to game developers. It attracted millions of users and was eventually acquired in 2011.
- Founding Discord: Jason Citron’s next venture was Hammer & Chisel, which created the game “Fates Forever.” Although the game was not successful, it led to the idea for Discord, a platform to address communication gaps in online gaming.
- Discord’s Mission: Discord’s mission is to bring people together around games, making it easier to connect with friends while playing and fostering community.
- Initial Monetization Plan: When Discord launched in 2015, its core features like voice, text, and mobile functionalities were planned to remain free. The platform aimed to make money through optional cosmetic features like TTS (Text-to-Speech) voice packs, themes, stickers, and more.
- Venture Capital Backing: Discord raised over $200 million from venture capital firms, which allowed it to experiment with various revenue streams while keeping core features free.
- Xbox Live Support: In 2018, Discord partnered with Microsoft to integrate its platform with Xbox Live, allowing users to link their Discord and Xbox accounts.
- Discord Store: Discord launched a store in Beta in 2018, offering premium games for purchase. The store competed with Steam and provided a 90/10 revenue split to developers, favoring independent creators.
- Server Templates and Rebranding: Discord introduced server templates and rebranded as a general-purpose communication platform beyond gaming, aiming to appeal to a broader audience.
- Discord Seller Shops: Discord introduced seller shops, allowing developers to set up their stores within the platform and sell games directly to users. It offers features like customization, revenue sharing, and options to run alphas or betas using the Discord role system.
- Visibility for Developers: Discord also provides paid services to enhance game visibility on the platform. These include adding art and detailed information for viral exposure, sending party invite messages, enabling spectate mode, and more.
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