Last week, Bloomberg reported that Microsoft is in talks to spend over $10 billion acquiring gaming chat app Discord.
While no deal has been made just yet, those familiar with the matter said that Discord reached out to Microsoft and that Microsoft is now in the running to buy the company, among other potential buyers. Discord has also held discussions with Epic Games and Amazon in the past, according to the report.
We reached out to analysts at CCS Insight and Futuresource Consulting to learn more about what a Microsoft sale could mean for Discord.
What might Microsoft want with Discord?
According to Principal Analyst for Workplace Transformation at CCS Insight Angela Ashenden, Microsoft’s interest stems from its desire to add a large consumer-oriented community or asset to its portfolio.
“Though it has a phenomenal presence in the business sector, it doesn’t have the consumer reach of competitors like Google and AWS, and this credibility is extremely important to enable it to win large deals with major brands facing huge shifts in consumer behaviour”, said Ashenden.
Discord’s huge community of active users will help Microsoft expand its consumer reach to match that of its competitors.
“Discord has a massive monthly active userbase of around 150m users and alongside Twitch acts as a go-to meeting place for the gaming community”, said Research Analyst at Futuresource Consulting, Morris Garrard.
“Not only would Microsoft benefit from subscriptions to the platform but would also gain access to user data. This would help to extend Microsoft’s reach within the gaming community and perhaps leverage the service to develop more targeted gaming related products and services”.
So, what changes can Discord users expect to see?
“One possible outcome from the merger may be bundling of Discord’s Nitro subscription with other Microsoft services such as Game Pass, helping the company to strengthen its grip on the gaming community and adding yet more pressure to Sony in the future”, said Garrard.
“However, a concern for gamers may be Microsoft’s recent closure of the Mixer video streaming platform, perhaps highlighting a tendency of over extension, that may ultimately harm the user experience of Discord”.
Discord will join Microsoft’s other collaboration apps, including Microsoft Teams, which saw a more than 50% growth in daily active users in 2020 (via The Verge), no doubt in part due to the ongoing pandemic. Discord could be used to bring a new perspective to apps like Teams and the way they’re used to collaborate.
“Of course the rumours also raise questions about the commonalities between Discord and Microsoft Teams, and how this would impact the company’s strategy in collaboration technology going forward”, said Ashenden.
“Though they target different audiences, there’s a lot of overlap in capability. However, Discord brings a more modern and innovative perspective on what online collaboration and interaction looks like for the digital native generation. Microsoft has always been a company to recognise innovations across the market and incorporate them into its own solutions, and a Discord acquisition is another potential opportunity. While on the surface it appears to be a prospective gaming acquisition, I think there’s potential for such a deal to have much more wide-reaching implications for Microsoft”.
Should PlayStation gamers be concerned?
The good news for PlayStation users is that Garrard doesn’t see Microsoft making Discord a Xbox or Windows 10-exclusive service.
“Although Microsoft would potentially encourage uptake of Xbox consoles or Windows 10 gaming PCs through the acquisition of Discord and potential bundling opportunities, this would deny access almost 100m paying PlayStation users”, said Garrard, noting that the active installed base of PS4 and PS5 users hit over 90 million in 2020.
“It may in fact be beneficial for Microsoft to allow access to PS users, in a bid to gain more user data on the games and services performing well for its arch-rival”.
In fact, with Sony’s recent success, the PlayStation maker has little to worry about right now.
“The PS5 is still enjoying excess demand and the console is expected to outsell even the PS4 across its lifetime”, said Garrard, in reference to the PS5’s forecast 120 million units anticipated to be sold between 2020 and 2027.
“In the longer term however, Sony is at risk of being superseded by Microsoft. The expected trajectory of Microsoft’s gaming proposition would see the company embracing new era gaming developments such as cloud gaming to a much greater extent than Sony. With the lines between gaming platforms becoming increasingly blurred and Microsoft’s integration of Xbox and its wider service portfolio with the substantial Windows PC installed base, the American company appears to be at a significant advantage for long term gaming dominance”.
Should we expect further acquisitions from Microsoft?
“What makes the Discord discussions interesting is the direct link to Microsoft’s existing Xbox gaming business, with gamers making up the majority of Discord’s userbase”, noted Ashenden.
“The company has been gradually building its investment in the gaming industry for some time – through acquisitions of gaming content studios, from Minecraft/Mojang in 2014 to Bethesda/ZeniMax Media this year. However with its chat/voice/video platform, Discord has more in common with Microsoft’s broader portfolio of applications”.
These acquisitions could be the push Microsoft needs to keep up with Sony in the gaming market.
“Microsoft is still currently trailing Sony in the console landscape, though the company is positioning itself to dominate the gaming ecosystem in the long run”, explained Garrard.
“Whilst Sony is doubling down on its first party exclusive content strategy, Microsoft is investing in enhancing its wider ancillary ecosystem, so the Discord acquisition would make a lot of sense in broadening Microsoft’s reach within the gaming community (particularly given the downfall of streaming platform Mixer)”.
Garrard expects Microsoft to continue to broaden its gaming proposition in the future, by acquiring more publishers, partnering with companies to optimise gaming on more devices or possibly even by controlling more of the hardware supply chain.
For more on Discord, make sure to check out our guide on how to make a Discord bot. For advice on consoles, visit our lists of the best game consoles and the best gaming laptops.
The post Here’s what Microsoft buying Discord would mean for gamers appeared first on Trusted Reviews.