While Zoom has become the be-all and end-all of staying connected over the past year, for gamers the first point of call has been Discord. This free voice, video, and text communication service may not have stolen headlines like Zoom, but the platform has seen user growth surge over the last year. Now, it has around 150 million users relying on the service to chat, meet, share, and play games. This growth appears to have caught the eye of Microsoft, with recent reports suggesting that it is interested in acquiring Discord for the colossal price of nearly $10 billion. Assessing the interest The driving force behind Microsoft’s interest in Discord may be that it would increase the company’s exposure to the global gaming market. Although Discord is not a developer or a platform where people directly play games, the service has become a central social hub for millions of gamers. If the acquisition occurs, Microsoft will likely seek to embed Discord and its millions of active users into an ecosystem of Microsoft products. The most comparable move would be Amazon’s acquisition of Twitch for just under $1 billion in 2014 . It was mutually beneficial: Amazon was able to incentivize Twitch’s users to sign up for Prime while encouraging Prime subscribers to watch and follow users on Twitch. Twitch now hosts 91% of all video game streaming , dwarfing competition from YouTube and Facebook, and attracts more than 2 million viewers at any given time of any given day. Microsoft will likely look to create a similar symbiotic relationship between Microsoft Game Pass—a monthly subscription that gives users access to a vast library of games—and Discord’s premium service Nitro, which provides an enhanced experience through upgraded video and upload functions and access to a global bank of emojis and avatars. The tech giant is also building an online gaming service, Project xCloud, that will let users stream Xbox games to any device with a screen and an internet connection. This could one day make expensive hardware, such as consoles, unnecessary. Microsoft could potentially integrate this service within Discord, since the platform already offers popular streaming options for users, paving the way for the post-console era of gaming. But if it is to succeed, Microsoft will need to learn from the mistakes of the past. Understanding the challenges Microsoft acquired Mixer, an upstart competitor to Twitch, in 2017 and spent as much as $30 million on deals with high-profile streamers such as Ninja to lure users to the platform. But the service failed to attract viewers and streamers in equal measure. Compounded by a lackluster user experience, it quickly ran out of steam and was shut down permanently last year .
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Microsoft acquiring Discord for $10B would be a huge bet on gaming—and a smart one