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.
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.
Indeed, Jason Citron spent a few years as a game developer, working for other companies.
From 2005-2007 he worked as a game programmer for several companies until, in 2007, he turned entrepreneur by joining and founding YouWeb Inc.
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.
Yet, OpenFeint used a strategy of working to help developers integrate within Game Center and other mobile gaming platforms (a cross-platform strategy).
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 in numbers, in 2020.
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.
Backed by several investors, Discord raised over $200 million from venture capital firms from Benchmark to Tencent, which helped the platform experiment with several revenue streams.
Discord Store
By October 2018, Discord launched its store in Beta, giving the possibility to 50,000 users in Canada to purchase premium games:
Example of premium features on the Discord store.Example of premium games on the Discord store.
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.
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.
Key takeaways
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.
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TikTok is the Chinese creative social media platform driven by short-form video content enabling users to interact and generate content at scale. TikTok primarily makes money through advertising, and it generated $4.6 billion in advertising revenues in 2021, thus making it among the most popular attention-based business models or attention merchants.
Spotify is a two-sided marketplace where artists and music fans engage. Spotify has a free ad-supported service and a paid membership. Founded in 2008 with the belief that music should be universally accessible, it generated €9.66 billion in 2021. Of these revenues, 87.5% or €8.46 billion came from premium memberships, while over 12.5% or €1.2 billion came from ad-supported members.
Founded in 2009 by Brian Acton, Jan Koum WhatsApp is a messaging app acquired by Facebook in 2014 for $19B. In 2018 WhatsApp rolled out customers’ interaction services, starting to make money on slow responses from companies. And Facebook also announced conversations on WhatsApp prompted by Facebook Ads.
Reddit is a social news and discussion website that also rates web content. The platform was created in 2005 after founders Alexis Ohanian and Steve Huffman met venture capitalist Paul Graham and pitched the company as the “front page of the internet.” Reddit makes money primarily via advertising. It also offers premium membership plans.
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Pinterest makes money by selling advertising for marketers and companies that can gain visibility for their brands and more sales for their shops. In 2021, Pinterest generated$2.58 a billion in advertising revenue, with 431 million monthly active users and a net income of $316 million.
Telegram is a messaging app emphasizing privacy and encryption, launched in 2013. It doesn’t make money yet, while it raised over $1.7 billion in Initial Coin Offerings throughout 2018, halted by the SEC in 2019. Telegram wants to keep the app 100% free while trying to sustain its growth.
Snapchat is a camera company, which business model moves across three industries: social media, content marketing, and AR. Snapchat generates most of its revenue from several ad formats (AR Ads, Snap Ads, Sponsored Geolifters, and Sponsored Lenses). The company also produces Spectacles, a set of AR glasses enabling content creators to produce interactive experiences through Snapchat.
Facebook, the main product of Meta, is an attention merchant. As such, its algorithms condense the attention of over 2.91 billion monthly active users as of June 2021. Meta generated $117.9 billion in revenues in 2021, $114.9 billion was from advertising (97.4% of the total revenues) and over $2.2 billion from Reality Labs (the augmented and virtual reality products arm).
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
