Discord still not profitable, lays off 17% of staff

Chat-provider Discord has slashed 17% of its workforce to help buoy its margins and reduce costs.

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The games industry is going through a great culling right now. Armed by years of record-breaking earnings during the Pandemic, game developers and publishers invested heavily into content production. Those games and projects were released into the market in 2023, leading to a congested release slate. Consumers had trouble keeping up with the glut of titles, content was in total free supply, and the competition was amplified as a result.

This led to some publishers like Nacon saying 2023 just had 'too many games.' Combined with rising costs driven by inflation, the competitive market has forced companies to cut costs wherever possible in order to maintain profit--or in Discord's case, to improve the path towards profit.

According to an internal memo acquired The Verge's Alex Heath, Discord plans to lay off 17% of its workforce, or about 170 people. This comes months after Discord laid off 4% of workers in late 2023.

In the memo, Discord CEO Jason Citron writes:

Today we are making the unfortunate and difficult decision to reduce the size of Discord's workforce by 17%. This means we are saying goodbye to 170 of our talented colleagues. This is a decision we did not take lightly, but it is one that we have conviction in to better serve our users, our business and our mission over the long term.

The memo indicates that Discord has yet to turn a profit but that the chat provider is in financial ruin. Discord simply grew too big too fast--the story of many games-makers during the 2020 cycle.

Sources tell The Verge that Discord has $1 billion in funding with more than $700 million in cash, and that it aspires to make 2024 its first year of profitability.