Microsoft May Spend $10B to Buy Discord
Microsoft is willing to shell out $10 billion to acquire popular communication platform Discord, according to a report from Bloomberg. The two companies have discussed the possibility of a sale as Discord, valued at about $7 billion, is also evaluating going public.
Discord is an amalgam of different approaches to communication, combining video, voice, and text options and a connection to online games that draws video game streamers and their watching audiences. The six-year-old startup has accumulated new users at a frenetic pace, hitting nine million daily users in just a couple of years and boasting of 140 million monthly users who are on the service up to four hours every day. The numbers especially spiked usage over the in 2020, likely in part because of the COVID-19 pandemic. Discord also jumped into the nascent social audio boom last summer, when Clubhouse was only beginning to invite users. Discord revamped the platform’s user experience to appeal to a wider audience, simplifying the onboarding and even changing the company’s tagline to “A place to talk.” The growth culminated in December when the startup hit a new milestone of fiscal growth by raising $140 million in a funding round that doubled its valuation. to the current $7 billion.
Microsoft’s interest in Discord is not immediately obvious. The tech giant may see $10 billion of value in Discord’s voice and video tech, but most likely it’s more about the social audio aspect. In light of the accelerated rise of Clubhouse and its rapidly proliferating rivals, Microsoft may see buying Discord as a solid way to get a leg up in the space. Assuming the deal happens without too much delay, that would probably be faster and possibly cheaper for Microsoft than building a social audio platform from scratch or trying to reconfigure Skype for the purpose.
The gaming element of Discord may also be part of the attraction since integrating Discord into the Xbox ecosystem might help boost the video game console’s prospects. Microsoft has a lot of new video game properties in its stable after buying ZeniMax Media, the parent company of BethesdaSoftworks, for $7.5 billion. The current discussion was reportedly begun by Discord, but talks are not final deals. Microsoft has been rumored to be in the market for other major players in social media without anything happening. The company was supposedly in the running to buy both TikTok and Pinterest at different points last year, with neither appearing to pan out.