How Does Discord Make Money? The Discord Business Model.

Discord is one of the most common, fully free chat apps in the 2021 gamer community. But how does Discord generate revenue? How is Discord’s business model structured? Let’s split this article down into bite-sized bits and discover how Discord stays afloat!

To summarize, Discord earns money by charging its 200+ million users for access to updated cosmetic features within the app. 

Discord’s massive user base draws investor interest, and the company raised a total of $493.89 million from venture capitalists, valuing the company at $3.50 billion post-money.

What is Discord?

Discord is a top-rated online chat application created to link gamers seamlessly through voice, video, or text. It was formed in 2015 and was created specifically for the gaming community.

revenue model of Discord

Discord is designed for players, allowing for crystal-clear conversations to be streamed. Still, it also finds uses in various other areas, like a large number of bootstrapped startups.

Several Discord features include the following:

  • Free communication forever
  • List of Friends
  • Easy push notifications
  • CPU use is kept to a minimum
  • Convenience for use on a PC or a mobile device
  • Reduced latency
  • Defense Against IP and DDoS Attacks
  • Numerous networks
  • Additionally, there are several in-game overlays…

I’m sure you’re already familiar with the Discord chat application. However, due to their lack of marketing, Discord could appear to be a small startup with little traction. Allow me to explain why this is not the case!

Here are some fascinating statistics that demonstrate how big Discord is:

  • Monthly active users are more than 200 million
  • Each week, 13.5 million servers are online.
  • Daily, 4 billion server conversations take place.

Once you’ve used it, you’ll immediately notice how slick and beautifully coded the application is (even if you’re not a developer!).

Let us discuss the Discord Business Model

Discord is not your typical email, speech, or video chat application. It is a community-building forum for developers. 

revenue model of Discord

Similar to Facebook groups, you can build invite-only communities on Discord by hosting servers, and the Discord app has a slew of other super interesting features that you’ll discover as you explore it.

However, we’ve strayed from our original topic; after all, how does Discord make money?

Their business model is divided into three distinct segments:

  • Discord Is a free chat application.
  • Nitro Discord 
  • Cosmetics Features

Revenue sources of Discord

When Discord first launched, they did not attempt to monetize their efforts. Rather than that, they focused their efforts on honing their product to the point where their target audience, the gaming community, fell in love with it.

Attract consumers, and revenue will follow.

Discord will now monetize its product in a variety of ways and continue to experiment with new features.

They currently generate revenue from two major sources:

  • Discord Nitro – Discord’s subscription service that provides subscribers with visual benefits.
  • Discord Merchandise – You can buy a variety of Discord-branded apparel and accessories here.

NOTE: As of August 2020, Discord Merchandise is no longer available. Their subreddit notes that the merch store is currently closed for maintenance (but it’s been more than three months).

Why is Discord Completely Free?

Discord is free since it is a side project created by Jason and Stan in 2015 to assist the gaming community in communicating more effectively online.

Jason Citron and Stan Vishnevskiy, Discord’s co-founders in 2015, were avid gamers who cherished the friendships and communities they could form while playing online games.

However, most communication methods available at the time were sluggish and choppy, impeding smooth communication. As a result, Jason and Stan set out to develop a more effective method.

They began as a side project to allow their gamer friends to communicate freely. And within a short time, the world had fallen in love with their application! More than 200 million users.

However, both creators chose to keep their pledge of a transparent and free online communication program. Then how is Discord free if they retain such a large user base, host such a large number of servers, and do so efficiently? Let us begin.

How is Discord Completely Free?

Discord provides free text, speech, video chat, audio and video streaming, and the ability to connect upto 100 servers. That’s a lot of overhead for Discord, isn’t it?

Discord has received significant venture capital funding as a result of its strong user base. According to Pitchbook Data, Discord has raised a total of USD 493.89 million in funding since its inception.

Discord’s net worth/post-acquisition value is $3.50 billion as of this writing, with 165 employees. With hundreds of millions of dollars in funding, they can maintain their massive user base.

How does Discord Generate Revenue?

Discord earns money by offering free value upfront and allowing power users to update the app’s aesthetics through the Discord Nitro subscription. Their income for 2019 was $70 million, according to financial data gathered from Pitchbook.

revenue model of Discord

Do people truly subscribe to Nitro? The subscription is $9.99 a month or $99.99 per year and includes server acceleration, increased file upload size, high-resolution streaming, new and personalized emojis, and an animated profile avatar.

Also, assuming a conversion rate of 1% for SaaS businesses, Discord will still have 20,000 paying users and $2,000,000 in sales. Given their financial data indicates a turnover of $70 million, we know their conversion ratio is significantly higher!

After this, let us explore a few frequently asked questions.

Frequently Asked Questions about Discord Business Model!

I see a lot of questions being posted on various forums and question-and-answer websites. These are some of the most frequently asked questions I’ve encountered about how Discord earns income.

Is Discord completely free to use?

Yes, Discord is free to use for both personal and commercial purposes. Discord Nitro, their paid subscription, adds a few non-essential features such as emojis, badges, and animated avatars. It’s something of an incentive for Discord’s devoted fans to contribute to the company’s continued life and profitability.

How much revenue does Discord generate?

According to Pitchbook, the company earned $70 million in sales in 2019.

What is the value of Discord (Discord valuation)?

As of August 2020, their company had raised $100 million in venture capital funding, bringing its post-funding value to $3.50 billion.

How much does it cost to run a Discord server?

Discord servers are completely free to build for all users, both paid and free. Additionally, users of Discord Nitro Classic and Discord Nitro receive the advantages of hosting boosted servers.

Conclusion

That concludes our brief article on how Discord earns money and the revenue model of Discord.

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