The era of console gaming is probably coming to an end. At least it seems Microsoft thinks so. Yesterday, the company announced the acquisition of a little-known game publisher called Mojang. It should not be very surprising if you haven’t heard of them, as they have not published many hit games. The one exception, however, is called Minecraft, and that game is the reason for the $2.5 billion acquisition.

Minecraft is a very basic ‘sandbox style’ game, where a user is dropped into a fully customizable world with the ability to move blocks around, creating objects and structures driven by pure imagination. There is not really a way to win the game, nor is there a story or plot moving the action. With Minecraft, the player’s creativity drives the game.

Apparently there is quite the market for games of this sort, because in the five years since its release in 2009 Minecraft has had over 100 million downloads. Possibly more valuable to Microsoft is the cult-like following behind the game. Complete with an annual gamer’s convention, called MINECON, the new owners of the game must be hoping for access to this vast community.

But with companies like Supercell and King Digital Entertainment dominating the top of the charts on both Android and iOS operating systems, it seems unlikely that a single published game can really give Microsoft the toehold that it needs in the future of gaming. Perhaps the alternative explanation for this acquisition is an attempt by Microsoft to learn more about the differences between the traditional console market and what makes a hit cross-platform post-console game. Analysts like Michael Pachter see this as a move for Microsoft to expand more into the gaming space, adding to some of the other studios they have already acquired, including: 343 Industries, Turn 10 Studios, and Lionhead Studios.

Unfortunately for Microsoft, the addition of Mojang will be lacking key players one would expect in many traditional high tech acquisitions: the founders. While many would expect a game sale of this nature to establish golden handcuffs so as to retain the key stock-holding and vision-driving employees from leaving, it was not the case in this deal. The deal does not include retaining key executives, Carl Manneh and Jakbok Porser.

Perhaps more importantly, game creator Markus “Notch” Persson is also moving on from the company. In public statements on his website and twitter accounts, Notch has tried to lift the curtain and give us a glimpse at his intentions and the reasons behind the sale. As a humble developer facing the onslaught of implications following the making of a hit game, Notch seems content going back to a quiet life of just developing games.

This isn’t the first time a developer has moved on from their game due to the pressure; just recall Dong Nguyen and his hit Flappy Bird. Still no one feels sorry for Notch, as his 71% ownership will net him a whopping 1.4 billion dollars from this deal. With that much money in the bank, he should be able to afford going back to a quiet life of developing.

In the meantime, it will be interesting to see Microsoft’s moves with this new game studio acquisition.

Zac Parsons

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One Response to Microsoft Acquires Maker of Minecraft for $2.5 Billion

  1. Thomas Hayden says:

    Microsoft spent $2.5 billion on this game because the potential to make money on it is enormous. And they did basically only buy Minecraft: Mojang studios has only had success with Minecraft. Its other three attempts (Scrolls, Cobalt, and 0x10c) have been either delayed or shelved indefinitely.

    What is it about Minecraft that is so appealing? For one, it has a massive and devoted userbase, many of them younger. It is one of the most popular games because it is easy to jump into, but with many layers of complexity within it. Go on Youtube and you’ll find some of the biggest subscriptions are channels that only stream Minecraft footage. If you’ve talked to younger siblings/cousins, it’s basically all they ever want to talk about — it’s this generation’s Mario, which is the kind of brand value Microsoft lusts after. And yet somehow it is also extremely small — the entire executable is 651 kilobytes. For comparison, MSPaint is ten times bigger.

    Microsoft has plenty of avenues to make money back here. First, Minecraft recently started offering a server hosting service. Instead of setting up your own server to play with your friends, which is kind of tricky, pay a monthly fee to buy time on a server farm managed by Microsoft. Second, they can rewrite the game to run better on XBox and the PC, opening up the doors for a revamped sequel (though, not too different from the original or else fans will complain). The original game is written in Java, which isn’t too reliable and leads to a lot of weird glitches. This is part of why the game isn’t as popular on XBox, and Microsoft certainly has the resources to overhaul the game in C++ or something for better performance. Third, despite the game’s popularity, there’s almost no merchandising involved besides some tchotchkes and paper models. Think about the marketing blitz when Star Wars Episode I came out, combine that with the young audience, and you’ve got an opportunity for profit in lunchboxes, shirts, backpacks. Anything that can have a pickaxe stamped on it will.

    Microsoft didn’t really need those executives. They were mainly just Notch’s friends. Notch hasn’t been very interested or involved in Minecraft since it exploded in popularity. Porser worked mainly on Scrolls, which Microsoft is probably not interested in. And Manneh, the CEO, has no particular knowledge that Microsoft needs. The game is simple and the business side was not very robust. Microsoft thinks they can make money without them, and I’m inclined to agree.

    In short, Microsoft doesn’t want to learn from this acquisition. It wants access to an empire. An IP on the scale of Super Mario when it comes to profitability and a place in broader popular culture. Ten years from now, when people are talking about nostalgic games from their youth, they’ll be talking about Minecraft, which by then will have several more properties to consume. Microsoft wants to ensnare those customers.