It is understood that a final deal is yet to be signed, but that negotiations are in their final stages between Discord and an unnamed company, which may or may not be Microsoft.
According to the reports, Discord reached out to Microsoft to gauge interest, and Xbox chief Phil Spencer has been talking to the company.
Here is everything you need to know about it.
What is Discord?
Popular with gamers (though the service can be used to facilitate conversation between fans of anything), Discord is an instant messaging and digital distribution platform designed for creating online communities.
Users communicate through text and visual media – much like other online forums like Reddit – as part of dedicated communities called servers, themselves collections of persistent chat rooms and voice chat channels.
Discord is currently free to use, but does offer a $10 (£7.24) per month “Nitro” subscription with extra features.
How did it start?
Discord’s associations with gaming link back to the app’s origins.
The idea came from Jason Citron, who had previously founded a social gaming platform for mobile games and went on to found a game development studio.
Citron became frustrated that he and his team found it difficult to work out tactics in games using available software, and so began development on a chat service that focused on user friendliness.
Discord was publicly released in May 2015, and quickly became widely used by esports and tournament gamers as a communications tool, although Citron has said the app made no moves to target a specific audience.
Discord’s links to the gaming community became stronger in 2017, when it allowed game developers and publishers to verify their servers, and in 2018, Microsoft announced it would provide Discord support for Xbox Live users, allowing them to link their accounts to connect with their Xbox Live friends list through Discord.
In recent months, Discord has sought to provide its services to broader sections of the online community, changing its motto from "Chat for Gamers" to "Chat for Communities and Friends" in response to an increase of users as a result of the Covid-19 pandemic.
Just a few months later, Discord announced it was shifting focus away from video gaming specificity to a more all-purpose communication and chat client for all functions.
What would a buyout mean for users?
Microsoft’s potential buyout of Discord is reminiscent of its 2011 deal with Skype, which subsequently saw the video-chat application merged with its Xbox gaming platform for ease of use on games consoles.
If it was to acquire Discord, a similar integration could become a reality on the tech giant’s latest batch of Xbox machines, the Series S and X.
What exactly that would mean remains to be seen, but some experts are suggesting Microsoft could be looking to bundle the perks of Discord Nitro with its popular Game Pass service.
“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.”
Game Pass allows users access to 100s of ready to download games for a monthly fee, and already comes with a multitude of extras, making it arguably one of the best deals in gaming.
Adding Discord to its portfolio would only sweeten the deal for many gamers, and could boost the services’ already impressive subscriber count, which currently stands at around 18 million worldwide.
“We expect Xbox to remain acquisitive to keep bolstering the value proposition of Game Pass and drive subscriptions higher,” Kanterman said.
Why might Discord be selling?
Discord has increased in popularity since its initial launch, but is yet to make an annual profit. That’s led the company behind it – Discord Inc. – to look into alternative avenues of generating cash.
Bloomberg's report suggested that Discord may eventually eschew a buyout deal altogether, instead deciding to go public and float on the stock exchange.
“I know they are in active discussions with a select few parties,” one source told Venturebeat. “The market is in a state where they could command strong double-digit billions of dollars.”