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Microsoft in Talks to Buy Discord for More Than $10 Billion

Could there be a deal on the horizon for the highly-coveted chat platform?
(NYC Russ)
(NYC Russ)
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“Microsoft Corp. is in talks to acquire Discord Inc., a video-game chat community, for more than $10 billion,” Bloomberg writes.

Why It Matters: No deal is imminent and the San Francisco-based Discord could be more likely to explore an IPO, but the game communication platform has grown increasingly popular through the pandemic as people embrace virtual gatherings. Microsoft’s entry into the picture would further a consumer-facing business that already owns LinkedIn and tried to acquire TikTok and Pinterest in recent memory. Though, a Discord acquisition would also signal continued interest in building out the company’s video game business.

  • Microsoft has been expanding its Xbox Game Pass feature offering and recently acquired ZeniMax Media (owner of The Elder Scrolls and Doom publisher Bethesda Softworks) for $7.5 billion.

Numbers To Consider:

  1. Discord’s community has over 100 million monthly active users.
  2. Its asking price is reportedly over $10 billion.
  3. Discord raised $100 million last year on a valuation of $7 billion, according to Pitchbook.
  4. Bloomberg Intelligence Analyst Matthew Kanterman: “There’s a big opportunity to bundle Discord’s premium offering, Nitro, into the Game Pass service to drive more subscriptions from the last reported 18 million.”

Non-Exclusive Negotiations: Epic Games and Amazon have also had Discord on their radar, holding discussions in the past. Epic didn’t respond to Bloomberg’s request to comment while Amazon declined.

What’s Next: It’s too early to predict how Discord’s future will play out, but the platform has its own plans. It has been building out its communication tools “to turn it into a ‘place to talk’ rather than merely a gamer-centric chat platform.”

Justin Oh:

A potential Microsoft ($MSFT) acquisition of Discord sounds very attractive and much more logical than Salesforce’s ($CRM) acquisition of Slack. 

In addition to the technical learnings Microsoft can apply to its Teams product, they are getting a prominent tool that is currently very popular in the creator economy. Furthermore, they can integrate Discord’s gaming features into their Xbox suite.

Satya Nadella has made great acquisitions during his reign so far, such as ZeniMax Media, and GitHub, and continued acquisitions like Discord only make me love $MSFT stock even more.

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