(Bloomberg) -- Microsoft Corp. is in talks to acquire Discord Inc., a video-game chat community, for more than $10 billion, according to people familiar with the matter.
Discord has been talking to potential buyers and software giant Microsoft is in the running, but no deal is imminent, said the people, who asked not to be identified because the discussions are private. Discord is more likely to go public than sell itself, one person said. Representatives for Microsoft and Discord declined to comment. VentureBeat reported earlier on Monday that Discord was engaged in sales talks.
San Francisco-based 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, which last year sought to buy social-media app TikTok and held talks to acquire Pinterest Inc., 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. Microsoft shares were up about 1.2% in the first minutes of trading Tuesday.
“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.”
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.
Discord has also held discussions with Epic Games Inc. and Amazon.com Inc. in the past, according to two people familiar with the matter. Epic didn’t immediately respond to requests for comment. Amazon declined to comment.