Microsoft in Talks for $10 Billion Takeover of Discord

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by Godfrey Benjamin · 3 min read
Microsoft in Talks for $10 Billion Takeover of Discord
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Many analysts believe that this move by Microsoft should be viewed as a strategic one.

Redmond Washington-based American multinational technology company, Microsoft Corporation (NASDAQ: MSFT) is in talks to take over VoIP, instant messaging platform, Discord in a deal that could be worth $10 billion. Per the reports, first revealed by Bloomberg citing people familiar with the matter, the video-game chat outfit is also in talks with other potential buyers, but no deal is imminent yet.

VentureBeat broke a report on Monday Discord is considering a $10 billion sales offer after more than one buyer showed interest. The VentureBeat report noted that the discussions had been narrowed to one potential investor, but one of the Bloomberg sources noted that Discord may not eventually be acquired as it may rather explore a public listing option.

Discord, a platform that came into the limelight in 2015 as a hub for gamers to communicate by video, voice chats, or text has grown its position in the past year as the coronavirus pandemic forced people to explore innovative ways to maintain social communications. Thanks to the COVID-19 lockdowns, the Discord platform was quickly adopted for holding online classes, community discussions, and dance rehearsals amongst others.

As a gaming-centric platform, the acquisition of Discord “would be a natural fit” with Microsoft’s Xbox video gaming business according to Joost van Dreunen, a New York University professor who studies the business of video games. He noted that Microsoft has been “building hardware, buying software, and is now stitching it all together with the connective tissue of a community layer.”

Per the ongoing media reports, neither Microsoft nor Discord has issued any official comments about a potential deal.

Microsoft Discord Takeover Seen as Strategic ny Analysts

Besides Dreunen, other analysts have seen the potential interest from Microsoft per the Discord takeover as a strategic one.

“Microsoft possibly acquiring Discord makes a lot of sense as it continues to reshape its gaming business more toward software and services,” said Bloomberg Intelligence Analyst Matthew Kanterman. “There’s a big opportunity to bundle Discord’s premium offering, Nitro, into the Game Pass service to drive more subscriptions from the last reported 18 million.”

With the Microsoft Xbox primed to be the frontline beneficiary as it is also integrated into the Discord platform, the Bloomberg report has it that Discord once reached out to the gaming outfit to gauge its interest and Xbox chief Phil Spencer has been talking to the company, according to one of the sources.

The deal will also be an easy one for Microsoft per financials as the tech giant boasts of about $131 billion in total cash as of Dec. 31. Discord is valued at $7 billion after a December $100 million funding round. The company has about 140 million monthly active users and it generated $130 million in revenue last year per a report from The Verge.

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