Discord is said to be in late acquisition discussions with Microsoft, but why would the tech giant want to buy the community-driven chat platform?
Recent reports have emerged that Microsoft (NASDAQ: MSFT) is currently in discussions to acquire Discord for over $10 billion. The Xbox-owner has been making a habit of buying gaming companies lately, just recently concluding its purchase of ‘Fallout’ and ‘Skyrim’ maker Bethesda Softworks. But now the company is eyeing the popular video game chat platform.
Rumors of the acquisition began circling earlier this week, and it looks like the deal could be closed soon. However, no deal is decided yet and there are still whispers that Discord could opt to go public instead.
What is Discord?
Discord is a VoIP, instant messaging, and digital distribution service designed for creating communities. The chat platform connects game studios and publishers with their communities and is hugely popular with gamers.
Discord is not the first video game chat tool, but its growth has been impressive. The company generated $130 million in revenue in 2020, up 188% year-on-year. This year, the brand is valued at $7 billion, making it a worthy company for Microsoft to get a hold of.
Why does Microsoft want to buy Discord?
Microsoft wants to buy Discord to drive its highly profitable gaming business. As Xbox has been a hit for Microsoft, the acquisition of Discord will further boost the tech giant’s gaming business. Discord, along with other gaming platforms, has benefited greatly from pandemic-driven usage, with more gamers forced to stay at home than ever. The app had 800,000 downloads per day and 140 million monthly active users in 2020, proving its wide reach and popularity with the gaming community.
Now is the perfect time for Microsoft to buy the company as it has proven its importance in the industry but it is still in its infancy regarding development. However, it has the potential to be a highly profitable venture for Microsoft as the tech giant is in a position to maximize Discord’s capabilities. Microsoft’s community-driven mission with the Xbox Series X makes this pair a match made in heaven.
Want to read more about Microsoft?
A MyWallSt subscription gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team post daily insights, subscriber-only podcasts and the headlines that move the market. Get your free access now!
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.