Discord Tripled Revenue With Subscription Access Last Year
Discord, an instant messaging and digital distribution platform, tripled its revenue last year with subscription access. The startup, which has shunned advertising, is a favorite of gamers who want to chat while playing online.
According to Discord co-founder and CEO Jason Citron, the company believes ads are intrusive and jeopardize users’ personal data. Instead, the platform has opted for providing paid services via Nitro, a subscription that offers unique emojis and enhanced video resolution.
“We really believe we can build products that make Discord more fun and that people will pay for them. It keeps our incentives aligned,” he said, adding that users often purchase Nitro subscriptions for the servers they belong to for friends. “It’s almost like giving your friends a group hug or taking them out to lunch.”
Discord, founded in 2015, doubled its monthly user base to roughly 140 million during the pandemic, generating $130 million in revenue, up from $45 million in 2019. Most users belong to community servers where they can chat by text for $9.99 a month or use Nitro for $99.99 a year.
“You’re banking on making more revenue from a small subset of passionate customers willing to pay for the product than you could from showing ads to the whole customer base,” said Doug Clinton, a managing partner at Loup Ventures. “It’s risky to rely on keeping consumers paying over long periods of time, but beautiful if it works.”
In December, Discord doubled its valuation to $7 billion after raising $100 million in a funding round led by venture-capital firm Greenoaks Capital. Overall, the company has raised an estimated $480 million, according to Crunchbase data, though Citron has no plans to go public.
Discord is currently testing more paid features, such as original multiplayer games and digital stickers. The platform, which doesn’t monitor chats, often struggles with online bullying and abuse, relying on users and volunteers to combat bad behavior. “We have zero tolerance for hate and online extremism,” Citron said.
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