Many users online use Discord as an online platform to interact with servers or other users. There are many features that the platform provides its users. These features include text messaging, voice and video calls, and video streaming, among other things.
Furthermore, most of these features are free to use and available worldwide on all operating systems.
Most of the features that Discord offers its users, or at least all of its essential ones, are free of cost. It means users do not have to pay any fees to use these features, either subscription-based or usage-based.
Despite that, some experts estimate the platform generated revenues of approximately $70 million in 2019. It leaves many people and the platform’s users wondering how the platform makes money. Similarly, most users don’t know the products and features that the platform offers.
The answers to all these confusions and questions are available in Discord’s business model. But before exploring what Discord’s business model is, it is vital to understand what the business model means and how users can use it to analyze a company.
What is the business model?
The business model of a company contains its core strategy for how it plans to generate profits. It defines the strategy by defining the products or services that the company plans to sell, its target markets, and anticipated expenses.
The business model of a company can play a crucial role in various aspects of its business. It defines the company’s markets, its actions and helps it understand its positioning and competition.
What is Discord Business Model?
For Discord, like any other business model, the main goal is to define three main things. These include Discord’s target markets, the products or services it must sell to generate revenues, and lastly, its anticipated expenses.
1) Target markets
The target market for Discord is the online communication market. It consists of internet users who want to chat with others through text messaging, voice, or video calls. Discord has to compete with many different direct competitors in these markets for market share.
The direct competitors include platforms such as Slack, Mumble, Ventrilo, etc. On the other hand, its indirect competitors contain social media platforms, such as Messenger, Skype, WhatsApp, etc.
Within the target market, Discord’s focus has changed significantly from the past. Previously, the company focused on gamers only. Therefore, its target market was all gamers around the internet. The company was able to achieve most of its goals for capturing its target markets.
However, the company also attracted users from other segments of the market. Therefore, it had to transition into targeting the overall online internet communication market.
2) Products or services
As stated above, the main features of Discord include text messaging, voice and video calls, and video streaming. Apart from these, Discord also has many other features, including server creation, channel management, adding friends, etc. However, none of these services generates revenue for the platform as all of these are free.
However, the services that do generate revenue for Discord are optional. These include Discord Nitro, Discord Nitro Classic, Server Boosts, and Game Inventory. Discord Nitro and Discord Nitro classic are subscription-based services that users can pay to get additional perks and features.
The costs for both of these services are $9.99 and $4.99 per month, respectively. Alternatively, users can pay $99.99 and $49.99 per year for each service, respectively.
Server Boost gives servers, instead of users, some additional perks or features. Both server owners and member of a server can pay for Server Boost, which costs $4.99.
Similarly, Game Inventory is a server through which Discord earns a 10% commission. It is an online game store similar to Steam but on a significantly smaller scale.
These are the main products through which the platform makes money. These products are a part of its business model.
3) Anticipated expenses
Like any other company, Discord must also bear some expenses related to the provision of its services and running the company. First of all, Discord must incur administrative costs related to running its business. These contain costs related to renting offices and employee salaries, etc.
Discord costs may be low as the company only has one office location and employs an estimated 500+ employees.
Discord must also bear costs related to marketing expenses. Similarly, it must incur technology and development costs to keep up with the latest technology changes.
However, the main cost that the company must bear is its cost of sales, which relates to the upkeep of its servers.
Discord has servers around the world that keep its services online for users to use. Similarly, Discord must also bear costs related to the provision of the services.
While these are some expenses that experts believe any company of similar services as Discord must bear, the actual types of expenses that it incurs are unknown. That is because Discord is a private company and does not share its financial statements.
However, the costs mentioned above should still provide a rough estimate of the anticipated expenses incurred by the company.
Conclusion
Discord is an online platform for communication with many free features. Some users wonder how the company makes money if its core features are free.
The answer to that question lies in its business model, which defines its target markets, products or services, and anticipated expenses. Given above is a detailed analysis of Discord’s business model.