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It is a question that many have asked; how does Discord make money? As we all know it is a free service. Not only that but it does not even have any ads on it. These very facts raise the question of how does Discord make money or how does the company possibly generate revenue.
Talking about generating revenue, we know a lot of big companies and digital platforms that make money through advertising and paid options. However, the fact that Discord does not involve in any of these methods, it is a matter to think about how the company builds capital.
Discord may be just for gamers but it has reported a lot of users that use the platform even otherwise. In this article, I will talk about how does Discord make money and how they got where they are in the first place.
Why Is ‘How Does Discord Make Money?’ A Big Question?
It was in 2016 when Discord promised that they would never run ads on their website or app. Advertisements are one of the most common ways by which most of the big companies and platforms like Twitter, YouTube, Instagram, Facebook, etc. generate revenue.
Most websites and free services including social media sites use advertising as a primary form of revenue. If you think about it, advertisement is indeed an easy way out in raising capital. However, as users, it is a big relief that Discord doesn’t want to run ads and meddle with the user experience.
Since Discord is a free service that does not even have any advertisements, it is certain that people would think that their data is sold. However, Discord has also cleared that they are not in the business of selling user data.
They have mentioned that they understand the “if you are not paying, then you are the product” sentiment and this does not apply to their operations. Despite their terms being unclear about the user data, there is no actual evidence of Discord selling user data to other parties.
Not just that, they have also cleared that they do not want to get involved in data selling operations. They have also stated that because data privacy being such a big deal, they do not blame the users for being skeptical.
Discord has said that the core features of operation will always be free and will be available to everyone and everywhere. There will be no server, no messaging, or user cap fees. What else could a user ask for right?
They have clearly stated that they will run these core operations for free no matter what the company decides to rule out in the future. Now, these are the things that make people wonder about how the company even manages to run itself. Let’s now find out how!
How Does Discord Make Money Through Investors?
A big part of how discord is able to operate with little forms of revenue is nothing but venture capital. In the years 2012 to 2015, they raised just under $10 million as part of their seed round, series A and series B funding. When Discord was young in 2016, it was then when they started raising big capital through their partners.
In 2016, the company raised $20 million through Greylock Partners. All this money was used to expand their staff and pay salaries. In the following year, Discord raised another $50 million through Index Ventures and thus raising more capital. Including everything, Discord managed to raise $79.3 million in funding.
Later in 2018 when they raised more capital, it was then when Discord was a company with a value of $1.65 billion doubling their previous valuation. Later that year in December, they raised $150 million with a company valuation of $2.05 billion.
The December 2018 funding involved many investors but their funding was led by Greenoaks Capital. As of the commencement of 2019, Discord had raised $280 million funding through just investors.
By the end of 2020, Discord raised $100 million in funding and with the valuation of $7 billion which is more than 3 times what it was in 2018. We must say, that is some good amount of increment for a free chat platform without any advertisements.
Here is a tabular form of the capital discord raised over the years.
|2012 to 2015||Seed Round / Series A+B||$9.3 million|
|2016||Greylock Partners||$20 million|
|2017||Index Ventures||$50 million|
|2018||Other investors||$50 million|
|2018||Greenoaks Capital||$150 million|
|2020||More investors||$100 million|
How Does Discord Make Money Through Discord Nitro?
One of the answers to how does discord make money is Nitro. Discord Nitro is their premium subscription service that primarily is a way for Discord fans to help support their development. It costs $9.99 per month and $99.99 for a year’s subscription. There are some cool features for the users.
The following are the features Discord Nitro offer for their users:
- Custom Tag
- Animated profile picture
- High quality screen sharing
- Global custom emojis
- File upload size of 50MB
- Profile batch
- Access to over $1000 worth of games
For the users who are not interested in the games, there is Nitro Classic with all the features except for the free games. Now, this is priced at $4.99 a month or $49.99 for a year’s subscription.
It is unknown how many users have nitro but according to statistics, by the end of 2020, there were 300 million registered Discord users. Now, this number says a lot about how many people use Discord and neglects the question of how many have Nitro.
Discord’s Income Through Other Sources
To begin with, Discord features plenty of optional cosmetics like special emojis, sticker packs, sound packs, and skin. These items help Discord make money on a free product without offering too unfair of an advantage to the people.
A few years back Discord also launched their game store to the public. This is a platform to purchase games and play them from. Since Discord’s target audience is gamers, it is a fair bet that some people will purchase games through it.
The split for the game store started off with a 70-30 split but later on, Discord opted for 90-10. The developer gets 90% of the share and Discord gets the other 10%. This 10% covers operating costs and they said that they are working on becoming more efficient with that. So, this is another mode through which Discord can generate revenue from.
Another way that the company brings in money is a small point but worth stating. Of course, Discord sells branded merchandise and takes home some amount of money from there. Discord sells t-shirts, socks, bags, and hats.
Closure | How Does Discord Make Money?
There are many critics that are worried about how does Discord make money and its business model; like many online free services, the tool often comes before the revenue. Companies have to rely on venture capital before they figure out how to turn a profit.
Well, despite being around since 2006 it wasn’t until 2016 that Twitter actually made a profit. On the other hand, Discord’s revenue generation may not be readily apparent and they surely have a long way to go.
Anyways, Discord has experienced a good amount of growth over these few years and so there is a lot of potentials. There is always room for new features and as a company, they are working on other sources of revenue.
I hope I have all the queries related to the question; how does Discord make money? If you think I may have missed out on something or you have any suggestions do let us know in the comments section below.