[Update: Halted] Microsoft is in talks to buy Discord for $10 billion
After acquiring GitHub for $7.5 billion in 2018, Microsoft now has its eyes set on Discord, an instant messaging service widely used by gamers. Even though the instant messaging service has a large gamer-appeal, it has the potential to be widely adopted across topic segments, as many non-gamer servers already do exist on the platform.
Microsoft Corp is reportedly in talks to buy Discord for more than $10 billion, according to a report from Bloomberg, citing people familiar with the matter. Earlier VentureBeat reported that Discord was looking to sell its business and was in talks with multiple parties, with Microsoft being one of them.
According to a person familiar with the matter, Discord approached Microsoft to gauge interest, and Xbox chief Phil Spencer is currently leading the talks. This news comes after Discord raised $100 million in December last year at a valuation of $7 billion.
Similar discussions were also held with Epic Games and Amazon in the past, two people familiar with the matter told the publication. The talks still seem to be in the early-stage, and a deal hasn’t been finalized yet. Discord could also go public instead of selling its business, the report notes. Both Microsoft and Discord didn’t respond to Bloomberg’s request for comment.
As per the figures released in December 2020, Discord boasts more than 140 million monthly active users. Last year, the company generated $130 million in revenue, a massive jump from $45 million in 2019. However, despite this splendid performance, the company is still not profitable.
Discord is always viewed as a platform built for gamers, but in June 2020, the company announced it would do away with its gaming-centric appeal and assume a new identity that would try to be inclusive of everyone. As part of this new strategy, the company redesigned its website and revealed a new tagline, “Your place to talk”. The company also promised to improve the user onboarding experience, make the in-built jokes in the client to be less gaming-specific, and increase the server capacity and reliability.
Update 1: Acquisition Talks Halted
A new report out today from The Wall Street Journal says that Discord has halted talks to sell itself. Multiple publications, including WSJ, reported last month that Microsoft was in advanced talks to acquire Discord for $10 billion. Apparently, those talks have ended without a deal being signed, as Discord “is performing well and prefers to stay independent at this time,” the WSJ reports. The chat startup reportedly fielded interest from at least three different companies about a deal, though we’ve only heard about Microsoft so far.
It’s unclear what the future holds for Discord. The company could go the traditional IPO route, do a direct listing, or do a reverse merger. Alternatively, acquisition talks may be rekindled at a later time.