Mixed reactions to Microsoft's possible deal with Discord

NEW YORK • Microsoft and Discord hold a great deal of sway with video game fans. As they now hold talks for a potential US$10 billion (S$13.5 billion) acquisition, a deal would join two companies in pursuit of audiences far beyond gamers.

Mr Jason Citron and Mr Stan Vishnevskiy, programmers and entrepreneurs, founded San Francisco-based Discord in 2015 as a platform for people to chat while playing video games together. The free service offers voice, video, text and gamer-friendly features like letting users broadcast the name of the game they are playing.

The app became popular a few years ago, rising alongside smash multiplayer hits like Epic Games' Fortnite. It also has a more sinister side to its history, having been used as a gathering ground for white nationalists to organise the deadly 2017 rally in Charlottesville, Virginia.

Since then, the company has made efforts to clean up its site and make it more inclusive. During the pandemic, with people stuck at home and playing more video games than ever, and also looking for ways to safely socialise, Discord became a hub for communities interested in the Black Lives Matter movement, homework help, book clubs and more.

Discord's service has long attracted all manner of celebrity gamers and social media influencers. Three years ago, Fortnite's biggest player, Ninja, helped instruct hip-hop legend Drake to set up his Discord account.

The site now claims more than 140 million users monthly and brought in US$100 million in revenue last year. Discord doubled its valuation last December to US$7 billion, according to The Wall Street Journal. It has raised a total of about US$480 million, according to business information platform Crunchbase.

On Discord, anyone can create his own community, or server, which can range in size from fewer than 10 people to hundreds of thousands. The average user might belong to one private Discord server that he just uses to hang out with friends, and other public servers dedicated to discussing his favourite movie or sports team.

For Microsoft, these varied communities may be Discord's biggest selling point. The software giant, which last year sought to buy social media app TikTok and held talks to acquire Pinterest, has been shopping for assets that would provide access to thriving communities of users, according to sources familiar with the company's thinking.

The maker of the Xbox console has snapped up numerous video game companies recently, including the publisher ZeniMax Media last autumn for US$7.5 billion. Microsoft may seek to integrate Discord with Xbox Game Pass, its Netflix-like subscription service for games.

One of the keys to Discord's popularity is its lack of advertisements. Rather than populate channels with intrusive ads like other social media services do, Discord makes money with a subscription service. For US$10 a month, members can customise tags next to their user names, upload larger files and stream with higher video quality.

Discord has become a useful way for game companies to directly promote products and foster communities too. The firm will verify servers based on popular video games, giving them a stamp of authenticity. Some game developers participate in their Discord channels.

The news of a potential deal has inspired mixed reactions in the gaming community. "If Discord is going to sell, Microsoft may actually be one of the safest places it can go without experiencing major changes," said e-sports and gaming consultant Rod Breslau. Microsoft has taken a hands-off approach with recent acquisitions, such as LinkedIn and GitHub, he said.

But not all gamers have been thrilled about the prospect. Twitter was full of people last Tuesday begging Discord not to sell. Some Discord channels were filled with negative reactions to the idea of further video game industry consolidation.

Said Mr Breslau: "Who really wants to see one of the big corporate overlords continue to swallow up parts of the industry?"

It may not come to that. Discord is more likely to go public than sell itself, one source familiar with the discussions said.

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