How Discord Tripled Its Revenue Without Selling Ads
The Many Uses of Discord
Discord, the instant messaging and calling platform, has seen a huge jump in its revenue and user numbers over the past year. The five-year-old startup began as a way for gamers to chat in real time while playing online video games together. People have found many other ways to use the service during the pandemic. For example, students use it to do homework together, friends use it to discuss shows and movies in real time, and retail investors use it to talk about trades.
Discord’s monthly user base doubled last year, hitting about 140 million. The company’s revenue hit $130 million—up from $45 million in 2019.
Real Time Conversations
In contrast to other services which people have been using to stay in touch during the pandemic such as Facebook (FB), Twitter (TWTR), and Snapchat (SNAP), Discord does not sell ads. The company was able to nearly triple its revenue last year just by selling subscription access to various perks on the platform. These perks include enhanced video resolution and special emojis.
Discord’s leadership says it plans to stick with this model. Discord is different from social media sites where people read and comment on posts throughout the day because almost all conversations on Discord take place in real time. This means that advertisements would be more intrusive than they are on a platform where people mainly scroll passively.
Investors Look Ahead
Despite Discord’s devoted user base and growing popularity, the company is not yet profitable. Tech investors tend to be enthusiastic about subscription-based models because they provide consistent, predictable revenue.
Many people have purchased Discord subscriptions for the first time during the pandemic. Now investors are wondering whether or not they will renew these subscriptions as more COVID-19 vaccines are distributed and vaccinated people are able to gather in-person again.
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