How Does Discord Make Money? The Freemium Approach & User-Generated Revenue

Discord, a social networking platform popular among gamers and live streamers, has made a significant change to its business model — allowing game developers to advertise to its users for the first time. The introduction of “Sponsored Quests” aims to bring advertising to the platform in an unobtrusive way, allowing gamers to opt into discovering games and win rewards for playing them.

Launched in 2015, San Francisco-based Discord now has around 150 million monthly active users, 19 million active servers per week, and 4 billion server conversation minutes daily, according to its website.

Discord servers act as communities on a range of subjects, which users receive invites to join through the mobile app, allowing them to communicate and collaborate.

As the company has previously avoided advertising, how much money does Discord make? In this article, we look at the Discord business model and how it brings in revenue.

Table of Contents Table of Contents

1. Key Takeaways
2. What Does Discord Do?
3. How Does Discord Make Money?
4. Discord’s Business Model
5. Future Growth Plans
6. The Dark Side of Discord: Controversies & Criticism
7. Competitors
8. The Bottom Line
9. FAQs
10. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. What Does Discord Do?
3. How Does Discord Make Money?
Show Full Guide
4. Discord’s Business Model
5. Future Growth Plans
6. The Dark Side of Discord: Controversies & Criticism
7. Competitors
8. The Bottom Line
9. FAQs
10. References

What Does Discord Do?

Discord is a free voice, video, and text communication service that was initially developed by co-founders Jason Citron and Stan Vishnevskiy to chat while playing video games. The service is available on the Xbox and PlayStation gaming consoles as well as Android, iPhone, Mac, and PC.

Discord has expanded beyond gaming to incorporate communities discussing a range of topics, from music to hiking to cryptocurrency trading.

Once users download and sign up for the app, they can join up to 100 public or private Discord servers.

The app works in a similar way to Slack in that each server can have several separate channels to organize topics for discussion. There is a cap of 500 channels per server.

Users can communicate via direct messaging as well as in the group servers and integrate the app with their accounts on other platforms – such as YouTube, Spotify, and GIPHY – to share third-party content with other server members.

How Does Discord Make Money?

Does Discord make a profit from its free service? The platform rapidly expanded in popularity during the COVID-19 pandemic, when its user base increased as lockdowns kept consumers at home using their devices.

Discord’s revenue has quadrupled since 2020 to reach $600 million, as the company sells premium features to supplement its free service.

How much is Discord worth? The company ended talks with Microsoft in 2021 to focus on building out the platform as a standalone company and raised $500 million in funding, which valued it at $15 billion.

Discord’s Business Model

Discord’s business model revolves around generating revenue from a combination of a “freemium” subscription model, game distribution, and user-generated revenue through server boosting. It is also developing other types of product sales and value-added services to further diversify its income streams.

Discord’s revenue generation relies on purchases from its large user base, and the company continues to explore methods to expand how it monetizes user engagement.

The Freemium Approach

Discord’s basic features are free to use, but the company operates a freemium model, which offers users the option to purchase premium features to upgrade their experience.

This allows the company to appeal to a large user base to drive engagement and create habits through the free version and then encourage its most engaged users to pay for additional features as the app becomes part of their everyday lives.

In the last quarter of 2023, Discord’s mobile app reported almost $31 million in revenues. This represents a 6% increase compared to the last quarter of 2022, according to Statista.

The freemium model of Discord monetization also encourages server and content creators to provide valuable and positive experiences for users, motivating them to pay for subscriptions.

Nitro Subscriptions

Discord’s subscription service, Nitro, launched in 2017 as the company’s first revenue stream and unlocks extra features, including custom emoji, larger file uploads, and custom video backgrounds.

There are two pricing plans:

Nitro subscriptions give users the option to customize their experience to express themselves with touches of personalization.

The increased file sizes and message lengths allow users to share content more easily, building collaboration and community. Nitro pricing depends on the users’ location.

Discord Shop

In November 2023, Discord opened its Shop to all users on its desktop or Web apps, allowing them to buy avatar decorations and effects to customize their profile.

Users can keep their purchases permanently, including limited edition seasonal items.

Nitro subscribers receive special member pricing and an exclusive set of themed items they can only use while an active member.

Game Distribution

In 2018, Discord launched its Discord Store to compete with the game distribution platform Steam.

The store was discontinued a year later, and instead, Discord allows developers to sell games directly on their servers, and charge subscriptions for access to the servers.

Discord takes 10% of each sale as a commission.

Server Boosting

Discord offers server boosting as a way to monetize users’ support for their favorite communities. Users can purchase “boosts,” which improve the server’s audio quality, increase the number of emoji slots and upload limit, and unlock a special loyalty badge.

Users can buy boosts individually or through a subscription. There are three levels of server boost, each with unique perks. Level 1 requires two boosts, Level 2 requires 15 boosts, and Level 3 is reached with 30 boosts.

Nitro subscription holders receive a 30% discount on purchases of server boosts. Once a server is boosted, all users have access to the premium features. Some servers offer incentives for users to boost their servers, increasing their popularity.

Server boosting aims to foster a sense of community and engagement on servers by offering benefits not only to the user but also to other members. The enhanced audio quality ensures a better experience, particularly for streaming communities and online events. The special loyalty badge also aims to encourage a sense of belonging in the community.

As of December 2023, the Midjourney server was the most popular community on Discord, with over 17.5 million members, according to Statista.

Additional Revenue Streams

Discord’s active communities and events drive a high level of user engagement that enables the company to bring in revenue from advertising, partnerships, and product sales.

In addition to subscriptions, Discord’s profit comes from selling a range of branded merchandise to users, including hats, hoodies, sweatshirts, and t-shirts, which also enhances its brand visibility.

The company regularly refreshes its merchandise with limited edition items and collaborations to create a sense of exclusivity and excitement and drive sales.

Actively engaging with users on design ideas ensures that Discord’s merchandise is in demand, increasing its sales and brand loyalty.

Discord has avoided running advertising that disrupts the user experience but provides brands with selective opportunities for advertising that aligns with its user base. This targeted approach aims to enhance the user experience by showcasing relevant products and services, increasing their functionality and popularity.

This, in turn, should increase the platform’s popularity and bring in more revenue opportunities from brand and creator partnerships.

Partnership & Sponsorship Deals

Discord collaborates with game developers, content creators, and brands through partnerships and sponsorship deals. The company looks to support and promote the work of game developers and content creators to help them reach a broad audience.

Discord’s partnerships often feature exclusive content, game integrations, and collaborations with well-known figures and organizations. They not only generate revenue but aim to strengthen Discord’s brand and presence within communities.

For instance, Discord has a partnership with Spotify that allows users to connect their Spotify accounts to share what music and podcasts they listen to on their Discord profiles or simultaneously listen to music on a server.

Future Growth Plans

Discord continues to add new features to its servers and subscription plans to drive user growth. The company has indicated that it intends to keep its basic messaging services free but expand its premium offering.

As the platform continues to grow and innovate, no doubt the company will explore new ways to strengthen its business model and revenue streams.

Discord will likely expand its gaming functionality and stores with exclusive and limited edition to bring in new developers and users. It could also introduce features such as advanced tools, interactive streaming sessions, virtual networking, and content packages.

The Dark Side of Discord: Controversies & Criticism

Despite its popularity, thanks to its ease of use and functionality, Discord has faced criticism for how it handles harassment and abuse on its platform.

The platform’s private servers can have hundreds or thousands of users and are only accessible to people who receive an invite link, making them challenging to moderate. Discord servers are not only used by gamers and other enthusiasts but also by groups discussing offensive and violent actions.

Young users can be exposed to profanity and abusive language, as well as mature content.

Supremacist groups have also been known to use the app anonymously. For instance, in 2017, organizers of the 2017 Unite the Right Rally in Charlottesville, Virginia, in the US – where one woman died – used Discord to plan their activities and encourage violence and racism.

The company’s Trust & Safety Team now makes up around 15% of its 400 employees and aims to respond to user reports and find and remove servers and users engaging in harmful activity.

The company states on its website:

“Discord Trust & Safety’s objective is to ensure that no harm comes to our users, or to society at large, because of actions taken on Discord, which is why we don’t tolerate activities that promote or advocate for violence.”

Competitors

While Discord is a leader in community-based communication platforms, it faces competition from other messaging platforms like Mumble and TeamSpeak, which are designed for gamers, as well as Slack and Microsoft Teams.

The Bottom Line

Discord’s business model hinges on its ability to capitalize on its growing user base, diversify its revenue streams, and effectively navigate challenges such as content moderation and competition.

Discord’s revenue model will likely evolve as the company refines its premium services to maintain its niche.

FAQs