Why Discord Might Be a Prime Acquisition Target for Microsoft

Gage Skidmore / Flickr

Discord, the popular software service utilized mainly by video game communities, has quietly positioned itself to become a major player in the gaming industry.

With a user base of more than 150 million, which has tripled over the last year, Discord has recently pivoted to add an online store that will sell games to customers through a digital marketplace similar to Steam.

Discord‚Äôs digital storefront is live as a beta version in Canada at this time. The beta upgrades Discord’s subscription service, which beginnings at $4.99 a month, and offers customizations for a more curated marketplace experience. The service is now set to include a section of nearly 100 games to download.

Given that¬†gamers are about to spend roughly $138 billion on games in 2018 alone, which is up 13.3% from the previous year, Discord’s community-driven streaming platform could stand to gain significant market share, making it a highly attractive acquisition target at its current $725 million valuation.

Enter: Microsoft

Microsoft (MSFT) has been shifting away from its hardware-focused model to digital content and streaming.

In fact, during E3 this year, Microsoft announced plans to launch a game streaming service, which would allow users to select a game online and play it immediately without the need to buy a disc or download the title. This is similar to Sony’s PlayStation Now that is available to gamers for $19.99 a month.

The company already began attempting to unify its gaming ecosystem through the Play Anywhere program, which allows both purchases and features to be shared between Xbox One consoles and Windows 10 PCs. Notably, Play Anywhere boasts a cross-platform marketplace, allowing access to both Xbox One and Windows 10 versions of the game with a single purchase.

The Play Anywhere program is relatively small but has significant upside given the recent push in cross-platform gaming, and this is where Microsoft could perhaps benefit most from the acquisition of Discord given its focus on curated gaming recommendations and upside potential for third-party game sales.

A Microsoft acquisition of Discord might not be as brazen as many would think, as the two companies already collaborating. Last April, it was announced that Microsoft would start allowing an option to link Discord accounts to Xbox accounts, in an effort to make “easier than ever to see what your friends are playing.”

“If you are playing Sea of Thieves on your Xbox, you can now choose to give your Discord friends the ability to see that and decide whether they want to hop on their Xbox and join you,” states Microsoft in its announcement. Clearly, Microsoft has already made significant in-roads to make Discord accounts seamlessly integrated into its larger ecosystem — a strategy that would make an acquisition less noticeable for the end user.

Microsoft has also made similar acquisitions in the past, with the most notable being Mixer (formerly Beam), a Seattle-based live streaming video platform that competes with industry-leader Twitch, which is notably owned by Amazon.

Ultimately, it might take the combined efforts of both Discord and Mixer to take on Twitch, and with the near-inevitable death of console gaming, an investment in Discord might just be an investment in the future of the industry.

More: EA and Microsoft Plan New Cloud-Based Video Game Streaming Services
Photo: Gage Skidmore / Flickr

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