An acquisition of Discord, which could top $10 billion, would buttress Microsoft’s gaming business, as video gaming has boomed in the pandemic.
SAN FRANCISCO — Discord, a social media company popular with gamers, has held deal talks with Microsoft for a transaction that could top $10 billion, according to people briefed on the situation.
Discord, which counts more than 100 million monthly active users, has been highly popular in the pandemic, as people have used the service to chat with one another while playing games. The San Francisco-based company, which has raised nearly $600 million in funding since 2014, has had preliminary deal talks with various suitors over the years, said another person with knowledge of the matter.
The privately held company, which investors valued at $7 billion in December, is also a candidate to go public. This month, Discord hired its first chief financial officer, a sign that it may be preparing for an initial public offering.
Joost van Dreunen, a New York University professor who studies the business of video games, said that if a deal were to happen, Discord “would be a natural fit” with Microsoft’s Xbox video gaming business. He said Microsoft has been “building hardware, buying software, and is now stitching it all together with the connective tissue of a community layer.”
Discord has since implemented stricter content moderation rules and banned alt-right communities. The app, which allows people to create private servers — in essence, small communities — features audio, text and video chat options.
Last year, Discord announced plans to expand beyond gaming into everyday usage among online groups of all kinds. It has been used for activities like college classes and organizing events like the Black Lives Matter protests.
The company crossed $100 million in revenue last year, one of the people said. Discord makes money by selling subscriptions to a premium version of the service.
Source: New York Times