Discord Investment Thesis

We offer our view of Discord because it is part of the total ARK Venture Fund portfolio. To see the most updated portfolio, please click here.
by ARK Invest

Discord is a casual communications platform that enables its individual users and groups/organizations to communicate via text, audio, and video. Through its comprehensive set of features, integrations, and helper bots, Discord enables communities to customize their servers and channels to their liking, allowing the platform to service a wide range of communication needs, from small-group casual socialization all the way to small and mid-size enterprise (SME) collaboration.

Discord was founded by former game studio founders Jason Citron and Stanislav Vishnevskiy in 2015. Leveraging its roots as a social platform for gamers, Discord evolved into the go-to platform for ‘casual’ interactions. Discord is most popular with younger generations,[1] with particular demand from video gamers and other internet subculture (e.g., anime, crypto/web3, technology, etc.) enthusiasts.

As COVID-19 accelerated the shift in consumer behavior towards online activities, we estimate that in 2021, internet users spent 38% of their free time online[2] (and 62% offline). We expect internet users to continue to spend more of their waking leisure hours online going forward.

We estimate that the global number of digital gamers stands at 3.2 billion in 2022.[3] While Discord has use cases beyond socialization for video gamers, we note that the current digital gamer userbase of 3.2 billion provides significant room for growth as Discord scales its platform further. Even to assume that all 231 million of Discord’s monthly active users (MAUs) are gamers would result in only 7% penetration of Discord’s serviceable obtainable market.

As consumers spend more of their waking leisure hours online, we believe that adding services related to digital entertainment will lead to increased discretionary spend on the Discord platform. In our view, increased gaming adoption and spend should benefit Discord as it is already treated as an integral part of social gaming for many video game enthusiasts worldwide.

As Discord continues to flatten its platform’s learning curve while providing creators and servers with additional tools to boost monetization and general activity, we believe that it will continue to gain traction with creators and communities of all sizes across various fields of interest.

https://www.statista.com/statistics/1327674/discord-user-age-worldwide/#:~:text=As%20of%20May%202022%2C%20users,of%20the%20Discord%20user%20base

Source: ARK Investment Management LLC, 2021, data sourced from eMarketer, Federal Reserve Economic Data, Organization for Economic Cooperation and Development, United States Census Bureau, United States Department of Labor, and World Bank Group

ARK’s estimate is based on 2021 Statista figures. https://www.statista.com/statistics/748044/number-video-gamers-world/

Disclosures
We offer our view of Discord because it is part of the total ARK Venture Fund portfolio. To see the most updated portfolio, please click here. Holdings subject to change. Not a recommendation to buy, sell, or hold any specific security.

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ARK Investment Management LLC is the investment adviser to the ARK Venture Fund.

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