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Microsoft May Acquire Discord For More Than $10B

WRITTEN BY | 24 Mar 2021
Microsoft May Acquire Discord For More Than $10B
M&A
08 DEC 2020
Microsoft Has Entered Into An Agreement To Acquire Smash.GG
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💵 Potential Acquisition

  • Microsoft is rumored to be in talks to acquire gamers communication platform Discord — the potential price of the acquisition may exceed $10B

  • Several sources which refuse to speak on the record said that negotiations are still underway. Microsoft and Discord did not comment on the matter. Moreover, some sources say there’s a greater chance of Discord going public than selling itself

  • According to one source, Discord has contacted Microsoft to measure the possible interest. The company has also allegedly held talks with both Epic Games and Amazon in the past. Neither of them commented on the situation

  • VentureBeat reports Discord to hire Qatalyst Partners to evaluate potential deals. Qatalyst was involved when Discord was for sale in 2018. The firm took a decision not to accept any offers back then

  • Negotiations were being held throughout 2018, with potential bids from $2B to $6B. Some buyers would prefer Discord to take steps that went against the company’s principles, such as more aggressive advertisement policy. Due to the failure of the previous sales phase, some say that Discord may not be purchased this time either

🎲  Product

  • The platform initially focused on gamers, but in the summer 2020 Discord decided to shift towards the new audience, distancing itself from an image of a gamer-centric chat app — now over 30% of users use it for activities unrelated to gaming

  • Apart from classic chat app features, such as text, voice and video communication, the app allows users to launch and stream their games and create their own communities and servers

  • The platform has more than 140m monthly active users, and, while not showing outstanding financial results due to being in a growth phase, has generated $130m revenue last year, up from $45m in 2019

💠 Strategic Rationale

  • Acquiring Discord, Microsoft can even further expand into the gaming industry and diversifies its software offering, getting new cross-selling opportunities. Recent $7.5B purchase of ZeniMax Media shows Microsoft is committed to the video game industry

  • Since the previous year when Microsoft tried to acquire TikTok, the company has been trying to get hold of assets that would give it access to big social media communities, comment people familiar with the company’s strategy

  • Considering the potential Discord’s valuation of more than $10B and its $140m MAU, Microsoft could earn approximately $70 from each monthly active user

  • Microsoft may be looking to bring Discord under its wing as the company focuses on apps and services, according to Bloomberg Intelligence analyst Matthew Kaner. There’s a large opportunity to integrate Discord’s premium service, Nitro, with Xbox’s Game Pass

💵 Previous Deals

  • The organization has secured $100m of investments last year at a $7B valuation. The round was led by London-based VC firm Index Ventures

  • Before that, the company had raised a total of $279.3m investments over 8 rounds

  • In 2018, Discord has purchased US-based esports company Blitz Esports for an undisclosed amount. Following the deal, Blitz’s League of Legends popular companion gaming app has moved to Discord

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22 September 2020
Microsoft Acquires ZeniMax Media For $7.5B
💵 Potential Acquisition Microsoft is rumored to be in talks to acquire gamers communication platform Discord — the potential price ...
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M&A
Microsoft
  • Established in 1975

  • Headquarters — Redmond, Washington, United States

  • Team of 165,000+ employees

  • Founded by Bill Gates and Paul Allen

  • Latest annual report

Discord
  • Established in 2012

  • Headquarters – San Francisco, US

  • Founded by Eros Resmini, Stanislav Vishnevskiy and Jason Citron

  • Global communication platform