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Level 58: Discord Renews its Focus
Discord champions community, but how can they monetize it?
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📜 This Week’s Notable News
More money, new focus: This week, Discord announced a pivot in focus: from gaming communities to a “day-to-day communication tool”. The announcement came on the back of $100M in fresh funding, and a renewed sense of direction for the communication app that has historically struggled with monetization. Discord’s main problem has always centered around monetization: how to launch services that don’t impede the stellar user experience, but can sustain hundreds of millions of users. As venture capitalist Chris Kurdziel put it, the move is representative of a crossroads that Discord finds itself - a decision between investing in social communities or video games where communities -- the larger market -- necessarily encompasses gaming. In a remote first world, Discord has seen use cases outside of its initial gaming purview, with record levels of daily engagement. Link
One of the conclusions that they’ve come to is the voice element of their product, differentiated enough from Slack’s messaging-first features and conducive to socialization on a variety of fronts. Clubhouse’s recent hype around voice as social is representative of tech’s interest and appetite for new social mediums, and voice always has been something Discord excels at.
A focus on social communication suddenly makes revenue generation much more flexible. Like most businesses, a bulk of money comes from prioritizing the larger user communities (whales), and then later shifting attention to the smaller communities. We brainstormed a few ideas on how Discord could best make use of its new social-first focus:
Pay for Platform: Similar to competitor Slack, there’s a scenario where Discord charges game developers, streamers, schools, or other community leaders for channels over a certain number of users. This feels a lot like a shift to a B2B strategy, when Discord has historically attended to a B2C model. Voice gives more optionality for users in this enterprise model.
Subscribe to Channels: There’s also a possibility that Discord pursues an Only Fans-type route where each room or channel requires an “entry fee” or subscription to join, enabling creators to focus on their true fans. Roblox and Minecraft are popular examples of unique servers with a dedicated fan base.
Platform “Gameification”: Some of the most popular and active communities are centered around “game-ifying” the social experience. Contribute art or a photo? Earn some points? Engage enough and earn a new role in your server and access to new topics/channels? The point here is that Discord can pursue the same strategy as Snapchat: let developers get creative with Discord’s API.
Pay for Integrations: One underappreciated aspect of Discord is it’s “bot” network - allowing users to code and integrate bots that can do just about anything into their communities. There are tons of monetization options available in this space, including the idea of “sponsored bots”. Imagine if Discord partnered with Twitch or Roll20 to release a bot that allowed live-streaming or DnD to be completely managed within the Discord platform.
💡 Industry Content
Mobile Streaming Platform: The Western streaming ecosystem is packed with competition, but no company yet has cracked the formula for mobile gaming. It’s unsurprising then that Tencent — which champions mobile games, leads publishing for foreign titles into China, and has a large ownership stake in most of our favorite gaming companies (Riot Games, Discord and Supercell, to name a few) — led a $30M investment in Trovo, a mobile-first streaming platform. Thanks to the ubiquity of smartphones, mobile streaming is quickly becoming the go-to medium nearly everywhere outside of North America.
But it also behooves us to be a bit skeptical of this investment. You’d think that because Tencent is snapping up popular IP for mobile-game launches and already has a large catalog of games/investments, a mobile-first streaming platform would make sense. However, this was Mixer’s approach with Xbox, and now Mixer has folded into FB gaming. FB arguably doesn’t have the best product, but the platform has made it abundantly clear that it wants mobile to be a big focus point. This investment is a direct challenge to Facebook. With FB Gaming’s emphasis on mobile and their dominance in mobile-first markets like South America, it’ll be interesting to see if Tencent’s platform will be popular outside of China. There’s certainly upside in this. Link
The Arms Race in The Clouds: This is a thoughtful look into cloud gaming and the infrastructure needed to scale it. There are analyses that are bullish on the cloud gaming thesis, but others critique its progress and practice, citing the need to build the technology properly before giving it to users. One of the main problems is the cost associated with cloud technology, and how the technology itself, which required an inordinate number of global data centers, can only be created by the Microsofts, Googles, and Nvidias of the world. Link
Apple Arcade Reneges on Contracts: Apple Arcade is starting to cut contracts with studios that don’t ostensibly drive enough engagement with the platform. It’s still unclear how Apple Arcade pays partner studios — like Spotify’s payout-per-play model or through a lump sum contract? (judging from their recent relationships with studios, it’s probably a contract model, in which case they would prioritize more engagement) —but what is clear is that they want people to return to their service to play more games. It feels like there’s a disconnect in the type of games they want, though. Apple Arcade has had a lot of one playthrough, story-driven games, but traditionally, mobile games that outperform on engagement and longevity have microtransactions and multiplayer functionality. Will they pivot their model to these formats? Link
🎮 Fun & Games
If You Fail, Try Again: In case you missed it, Amazon is making video games now, and it’s not going well. After fumbling the launch for Crucible, Amazon is “un-releasing” the game and moving it back to Closed Beta. Moving to Beta gives Amazon a second shot at launching the game with a better end product. Hopefully. Link
What Happens When Cats Get Drunk: Dwarf Fortress is one of the single strangest games we’ve ever seen. Represented entirely in ASCII characters (that is, basically every character you could find on a keyboard), Dwarf Fortress feels like a game that's just as complex to learn as it is to play. In this interview with the game’s creator, we get a first hand look into the game’s meticulous design. After listening to him describe how adding the ability to drink alcohol in game led to the mass death of hundreds of in-game cats, it’s clear that Dwarf Fortress deserves its own unique category. Link
A Mysterious Ban: Dr. Disrespect, one of Twitch’s most well-known streamers, was permanently banned from the platform. On the heels of signing an exclusive multi-year contract with the platform earlier this year, the sudden move has left fans clambering for information. Link
😎 Other Cool Reads
Twitch’s Role In Streaming’s #MeToo Moment: A sort of soap box for content creators, Twitch plays an increasingly important role in deciding what topics are at the forefront of the gaming community. In last week’s issue, we briefly discussed gaming’s reckoning community with sexual assault, harassment, and abuse. Historically, Twitch has steered clear of taking any action in support of victims. However, this time Twitch finally has taken action on banning creators with irrefutable allegations against them.
At The Pause Button, we’ve been having discussions about what next steps would like. Toxic culture, masculinity and cyberbullying are glaring problems in the games industry, particularly in the streaming world where lines are blurred between chat and streamer, streamer and streamer. Twitch, on its soap box of curated content, has an opportunity to step in as an educator. The problem has been surfaced from its community, but we feel it’s time for a tops-down approach to fixing this issue. What could this look like? Mandatory trainings, panel discussions, and required readings. Link
The Blurred Lines Between “Work” & “Play”: For many, playing games exists as the antithesis of work. Why, then, are some of our most beloved games modeled after the jobs we avoid? In this video, YouTuber Games & Culture explores the differences between traditional work and what we’re experiencing in titles like Animal Crossing and Call of Duty. The result is an oddly familiar form of pro-capitalism game design that is masked by loud noises and bright colors. Link
How Sound Is Created: Jessie James Garcia, sound designer for the recently released Last of Us Part II, breaks down how he created the sound of breaking glass for the game. It’s a fascinating read for someone with very little experience in sound/game design. Link
😍 Our Current Favorites
Fawzi (@fawzitani) :
I read Andre Iguadola’s The Sixth Man earlier this week and was blown away (among many things like the NBA capitalist complex) by his description of how the media develops overblown narratives for professional athletes. I think the same can be said of politics, video games, and really any narrative topic. His thoughts and anecdotes of how narratives in media are created to appease their readership had me reflect on the type of content we’re curating and writing about: how we should always take a step back to ensure we’re doing our best not to contribute to fanfare, but to present content that is conscientious of their subjects as well. Link
One thing that's struck me recently is how wildly diverse “games as a career” can be. Journalism, Game Design, Community Management, Esports Athlete, there are so many different paths that are all centered around the same medium. One particularly moving account of a games career that caught my attention was written by Nico Tuason, an indie game dev based in the Philippines. His retelling of the first ten years of his career is a tough, but honest take on what it takes to succeed in games. Link
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