Chat startup Discord Inc. has ridden a surge in popularity to soaring revenue and a lofty valuation despite lacking the one thing found on most successful social-networking platforms: advertising. Its chief executive says don’t expect that to change.
Discord nearly tripled its revenue last year solely by selling subscription access to exclusive perks for users. By contrast, the companies behind other free online hangouts—including Facebook Inc., Twitter Inc. and Snap Inc. —primarily sell targeted ads built around sharing users’ personal information.
In an interview, Discord co-founder and CEO Jason Citron, 36 years old, said the company has balked at the advertising model favored by its peers because ads would be too intrusive. People use Discord to hold conversations in real time, he said, as opposed to passively reading, making or commenting on posts. He also said he thinks that consumers in general dislike ads and don’t want their data shared with brands.
“We really believe we can build products that make Discord more fun and that people will pay for them. It keeps our incentives aligned,” he said.
For a startup like Discord, trying to monetize through ads would be difficult, analyst Mark Shmulik with AB Bernstein said. “You’re then competing with the big incumbents in Google, Facebook and the other social platforms for ad dollars and that’s no easy task,” he said. “It is a heavy lift.”