How do you go from building a chat app for games to revolutionizing the future of internet communities? Discord co-founders Jason Citron and Stan Vishnevskiy know the answer.
They saw Discord grow from 0 to 150 million active users per month throughout the last few years while people used their platform to build communities around their interests.
How did this app become the next big thing in communication? What does the Discord business model look like? And how does Discord make money by offering a free platform?
In this guide, we’ll break down Discord’s early growth, their pivot beyond gaming, how Discord makes money, and how the platform is planning to become the go-to place for online communities.
1. What is Discord?
2. How Did Discord Start?
3. How Discord Launched
4. How Did Discord Become so Popular?
5. Discord – Not Only For Gamers
6. How Does Discord Make Money?
7. Discord Funding
8. Discord Valuation
9. Discord Challenges
10. What’s Next For Discord?
What is Discord?
Discord is a free chat app that allows users to communicate via text, video calls, and voice chat. This communication happens through “servers,” which organize communities. Users set up servers where they can connect and attract an audience.
The Discord platform was originally designed for gamers, but it has branched out to all kinds of communities and niches. You can find a Discord server for just about any topic. A Discord server can either be public (freely joined by anyone) or private (invite only).
Think of apps like Slack and WhatsApp – Discord falls in the same communication chat platform category.
Users can start their own online communities where they can invite their friends to join. Inside these servers, users can set up dedicated channels based on different topics, allowing people to find friends based on their interests.
How Did Discord Start?
Discord was founded by Jason Citron and Stan Vishnevskiy – both lifelong gaming enthusiasts.
The Discord app was created for gamers, allowing free voice, video, and text chat options. The original idea behind Discord was to help gamers connect with their friends through an easy chat platform.
Before Discord, people used a variety of apps (such as Skype or Teamspeak) to talk to their friends during gaming sessions.
Citron and Vishnevskiy realized that these apps were outdated, leading to a less-than-ideal gaming experience. So, they decided to fix that problem and develop a platform that would allow gamers to move past all of these disruptions.
As Discord founder Jason Citron, says:
“The idea for Discord came from looking at our own experiences playing lots of online games back around 2014 and sort of noticing that the tools we were using to play these games were pretty outdated. The tools that we were using didn’t have good mobile apps, you couldn’t send pictures to your friends in them, and the voice quality we knew could be better. And so what we did was create an all-in-one text, video, and chat app that replaced this constellation of tools that people used.”
The Discord app emerged from a gaming studio run by Citron and Vishnevsky.
The studio developed a tablet-based multiplayer game with an inbuilt voice function to help people communicate. After realizing that the best part of their game was the inbuilt chat, Vishnevskuy suggested focusing on building that feature into a product.
At the time, Citron and Vishnevsky didn’t have a lot of competitors because even the most popular gaming servers, such as Teamspeak and Ventrilo, had their fair share of issues.
These apps would ask gamers to rent servers and pay monthly fees. They would also have to share their server’s IP address, and their friends would then have to download the application.
Citron gave gamers a way to solve all their communication problems with the Discord app. The platform featured a clean, easy-to-navigate design. Along with that, it was completely free to use.
With a desktop client and a web app, users could invite their friends with a simple link that could be opened on any browser.
Above: Discord co-founders Stan Vishnevskiy (left) and Jason Citron (source)
How Discord Launched
Discord launched in 2015, and its first set of users came from Reddit’s gaming communities.
The company claims May 13th 2015, as their official launch day because that’s when strangers started using the platform.
The launch started when one of the founder’s friends shared a server link in the subreddit for the game Final Fantasy XIV. The hope was that people would use it to discuss a new expansion to the game. Once people joined the server, Citron and Vishnevskiy were there to welcome users, let them know what Discord was all about, and listen to their feedback.
As a result, people started going back to Reddit, talking about how cool Discord and its developers were.
This led to a couple of hundred people signing up for the platform and checking it out. This way, through word of mouth within the gaming community, Discord started growing.
How Did Discord Become So Popular
One of the major reasons for the platform’s growth was that it launched when e-sports and online video gaming streaming via Twitch were rising. Still, games like Fortnight and League of Legends had limited communication tools.
Twitch streamers started switching to private Discord servers because they were so easy to navigate and build a community, creating the perfect marketing campaign for the app.
Read our guide if you want to learn more about how Twitch started.
One of the most iconic moments in Discord’s growth history was when Ninja – a celebrity streamer – played Fortnight with the rapper Drake and made him download Discord in front of 600,000 viewers.
Around 2019, the rise of content creators, influencers, YouTubers, Instagram meme accounts, and celebrities also helped the platform grow as they started making their way to Discord to connect with their audience and build communities.
As a result, Patreon, a monetization tool used by creators that allows their fans to purchase paid subscriptions to their content, integrated Discord into their service.
In the summer of 2019, Discord once again took over the gaming industry when the online multiplayer game ‘Among Us’ was launched. With its popularity, the game was single-handedly responsible for over 1 million people downloading Discord to play along with their friends. Because of this, the app reached the number 6th spot on the US App Store.
Like many other social networks and chat platforms, Discord experienced massive growth thanks to the peak of the Covid-19 pandemic in 2020. More and more people looked for ways to connect online, and Discord’s free voice communication service was perfect.
Above: Discord video chat (source)
Discord – Not Only For Gamers
From February to July 2020, Discord’s user numbers increased by 47%.
Interestingly, not all of these people were gamers. In fact, they were all different people looking for was a place to hang out with their friends online. Discord was the perfect place for them to do that with its great features.
Some of the non-gaming communities drawn to Discord include retail trading communities that have emerged from the likes of Reddit’s WallStreetBets subreddit. Cryptocurrency enthusiasts, streetwear fanatics, and music lovers are also popular Discord users.
In June 2020, having realized that it could tap into a brand new market, Discord rebranded with a new tagline: “Your place to talk,” which was changed to “Imagine a place” a year later.
The homepage for the app was also cleaned up, making it more inclusive to communities outside of gaming. By the end of June 2020, Discord had around 300 million users – which increased to 350 million by June 2021.
Discord’s founder said:
“It was only in the last two years, kinda starting in 2019, that we really started seeing people use Discord for more than gaming and it’s just accelerated so dramatically over the last year and a half and now we have over 150 million people per month that come to discord to study homework or participate in communities that they love around topics that they’re passionate about or just hanging out with their friends and just do things together online.”
How Does Discord Make Money?
How does Discord make money if the app is free?
One of the biggest reasons behind Discord’s explosive growth was that the platform was entirely free with no messaging or call limits while also giving users the option to start their own unlimited servers.
So, how didoes Discord make money then? Discord’s revenue model covers three main areas.
Discord Nitro Subscriptions
In 2019, Discord introduced ‘Nitro’ – their subscription service that costs around $5.
With Discord Nitro, Citron called upon Discord enthusiasts to support the platform while also receiving some extra perks, such as higher-quality streaming and more personalization options. This way, Citron moved away from selling ads which disrupts the user experience.
Discord Nitro offers two plans for $4.99 a month, $49.99 a year, or an upgraded one for $9.99 a month or $99.99 annually. More than 1 million Discord Nitro subscription users have joined it.
Above: Features of Discord’s Nitro subscription
Another way that Discord makes money is through distributing games. The Discord game store was launched in 2018.
Nitro subscribers could use the game store to access games exclusive to Discord, like Into the Breach and Dead Cells. After about a year, Discord phased out the game store.
Discord partners with game developers that sell games exclusively on Discord servers. Discord promotes the game and server to provide more exposure. Each time a game sells on a Discord server, the company takes a 10% commission.
Users can improve their own servers through server boosting. Discord makes money by offering three different server boost levels, with each level offering different functionalities and better performance.
Server boosts are paid through $4.99 monthly subscription fees. Level 1 requires two users to pay the fee, level 2 requires 15 users to pay the fee, and level 3 requires 30 users to pay the fee. Everyone who accesses the server can use the premium server boost features.
In total, Discord has managed to raise over $980 million spread across 14 rounds of funding, with their latest funding being raised in September.
Discord is backed by investors such as Sony Interactive Entertainment – which says a lot about the company’s future potential.
Currently, Discord has a valuation of about $15 billion thanks to its latest investment round of $500 million.
There has been a lot of speculation around Citron selling Discord while the company is in its prime. According to Citron, he’s in no hurry to sell. Even though rumors say Microsoft recently expressed interest in purchasing the platform for around $12 billion.
While the company hasn’t released any official figures, Discord generated an estimated revenue of $130 million at the end of 2020.
Despite the success and growth of the Discord business model, the platform has still faced its challenges.
Like other social platforms, Discord has come under fire for letting users post problematic content, including hate speech and online bullying.
While this happens everywhere on the internet, the consequences on Discord can be more extreme because of the platform’s private communities and relatively small spaces. Especially with a considerable percentage of the app consisting of teens.
However, once Citron realized that this was a problem, he established the Trust and Safety team, making up more than 15% of Discord’s staff. This made Discord a founding member of the Digital Trust and Safety Partnership – a collaboration among tech companies to develop mechanisms for handling inappropriate behaviors online.
Another challenge Discord has faced is bigger companies copying its features. However, with the kind of loyal fanbase that Discord has managed to cultivate, it looks like the company doesn’t have to worry about competition for now.
What’s Next for Discord?
So, what does the future hold for Discord after all of this? For now, Citron is planning on making the platform more accessible for lesser tech-savvy users to open up to a new customer base.
At the same time, Discord is also experimenting with new revenue streams, helping professional streamers make money through the platform with their ‘Stage Discovery’ feature that allows businesses and creators to list their public events.
Recently, the musician Grimes used the feature to give the people on her server an exclusive teaser for her new song – and in the future, more celebrities are expected to do the same.
In addition to that, Discord is also hoping to go back to its gaming roots by introducing in-house games within the app where users can make small purchases, helping the company generate revenue.
However, the biggest step that Discord has taken in 2021 has been its partnership with Sony that will allow users to connect Discord directly to their consoles. The feature is expected to launch in 2022 and will help Discord establish itself in the console gaming industry.
So if you’re wondering “how does Discord make money?”, there are various new revenue models in the pipeline.
Born out of a pivot from a game studio, Discord saw massive growth thanks to solving gamers’ communications issues. Since then, this easy-to-use, feature-packed platform has emerged as a tool that’s useful to communities beyond gaming, helping to grow it into a market leader in online communications worth billions.
If you were asking the question “how does Discord make money?”, you’ll find that the chat app has developed a solid business model with a range of different revenue streams.
Is Discord the future of online communication? Who knows. The platform is so much more than just a tool for gamers and game developers, and its growth doesn’t seem to be slowing down.
Who Owns Discord?
Discord is privately held. Discord’s Founders are Jason Citron and Stan Vishnevskiy, with Citron acting as CEO. Benchmark was the firm’s lead series A investor and is possibly the largest shareholder.
How Do Discord Servers Make Money?
A Discord member that loves a server can type “donate” into the chat. This takes them to a panel where they can make a monetary contribution via PayPal. This allows server owners to make money from the platform.
Is Discord Public?
At the moment, Discord remains privately owned without a clear plan to go public.
What is Discord Rich Presence?
Rich Presence is a new feature that Discord released. It allows users to surface unique, interesting, and actionable data inside a user’s profile when they play your game.
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