Microsoft Reportedly in Talks to Acquire Discord for More Than $10 Billion

Microsoft Corp. is in discussions to acquire video game-focused chat platform Discord Inc., for more than $10 billion, according to a report by Bloomberg News. Citing sources familiar with the matter, Bloomberg reported Monday that a deal is not imminent and Discord has also been talking to others about a sale. Bloomberg said Discord has previously talked with Amazon and “Fortnite” maker Epic Games Inc.

One source, however, told Bloomberg that Discord was more likely to go public than sell itself. Discord recently hired a new chief financial officer as the first step toward a potential IPO, the Wall Street Journal reported last week. Representatives for Microsoft and Discord declined to comment. VentureBeat reported earlier on Monday that Discord was engaged in sales talks.

Discord is best known for its free service that lets gamers communicate by video, voice, and text, and people stuck at home during the pandemic have increasingly used its technology for study groups, dance classes, book clubs, and other virtual gatherings. It has more than 100 million monthly active users and has been elaborating its communication tools to turn it into a “place to talk” rather than merely a gamer-centric chat platform.

Microsoft has reportedly been targeting active online communities that it can pair with its cloud platform, and the Financial Times last month reported, which last year sought to buy social-media app TikTok and held talks to acquire Pinterest Inc., The software giant has been shopping for assets that would provide access to thriving communities of users, according to people familiar with the company’s thinking. Microsoft’s Xbox business has also been expanding the suite of subscription perks it provides as part of its Game Pass offering.

Bloomberg Intelligence Analyst Matthew Kanterman said: “Microsoft possibly acquiring Discord makes a lot of sense as it continues to reshape its gaming business more toward software and services. 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.”

After Microsoft’s recent $7.5 billion purchase of ZeniMax Media Inc., owner of The Elder Scrolls and Doom publisher Bethesda Softworks, an acquisition of Discord would signal the Redmond, Washington-based software giant’s willingness to keep investing in its video-game unit. “We expect Xbox to remain acquisitive to keep bolstering the value proposition of Game Pass and drive subscriptions higher,” Kanterman said.

Discord reached out to Microsoft to gauge interest, and Xbox chief Phil Spencer has been talking to the company, according to one person. The company raised $100 million at a $7 billion valuation last year, according to Pitchbook.