Microsoft to buy ‘Minecraft’ maker for $2.5 billion
What started as a one-man project and quickly grew into a computer game phenomenon played by tens of millions of children and adults worldwide will be absorbed by Microsoft Corp. for $2.5 billion.
Microsoft announced Monday that it will buy the maker of the highly popular “Minecraft” video game — privately held Mojang in Stockholm — in a deal expected to close this year. The purchase follows Amazon.com Inc.’s recent agreement to buy video network Twitch Interactive for nearly $1 billion and Facebook Inc.’s purchase of virtual reality headwear maker Oculus for $2 billion.
With “Minecraft,” Microsoft picks up a fast-growing game platform that in just three years has built a large and enthusiastic customer base. “Minecraft” could strengthen Microsoft’s Xbox console business and add spunk to the company’s mobile phone and tablet offerings.
More than 100 million copies of “Minecraft” have been downloaded onto personal computers, including 54 million paid downloads. Tens of millions more downloads have come from the Apple and Google Play stores for mobile devices, helping “Minecraft — Pocket Edition” remain among the 50 highest-grossing apps for the last two years on both stores, according to AppAnnie. Mojang generated about $120 million in profit in 2013 on about $300 million in revenue.
“Minecraft” appeals to 10-year-old girls as well as 50-year-old men, a broad demographic that’s unusual for Microsoft. It’s not a shooter game, but a virtual world equipped with huge sets of tools and digital materials that let users create sub-worlds from their own imaginations. Players wander, collect resources and use timber, stone, brick and tools to erect often awe-inspiring structures that they may have to defend. Many call it virtual Legos with a side of monsters, but the two games look nothing alike.
“Halo,” Microsoft’s hit first-person shooter game, attracts few gamers outside teenage boys and twentysomething men. So ensuring that “Minecraft” and the community that’s arisen around it last decades more could mark the first challenge for Microsoft Chief Executive Satya Nadella’s strategy around gaming. He wants to “power” people’s digital fun — even if it’s not on gadgets made by Microsoft.
“The big risk for Microsoft is these games rise up, but at some point, they fall out of favor,” said Gartner research director Brian Blau. “You kind of have to wonder, how are they going to transform it?”
Microsoft will begin answering that question without “Minecraft” creator Markus Persson, who announced Monday that he wants to return to working on small projects. He has said that creating a mega-hit wasn’t a goal when he quit his programming job to launch the test version of the game more than five years ago. But Persson’s receptiveness to feedback on forums and Twitter drove the game across the Web and made it a global phenomenon.
Most intriguing for Microsoft, “Minecraft” became what it called the most popular online game on the company’s Xbox gaming console. It’s also available on Sony’s PlayStation and just about every major hardware platform, and Microsoft said it plans to keep it that way.
Jens Bergensten, who had been overseeing day-to-day operations at “Minecraft,” will remain the game’s lead developer.
An untold number of independent developers, sometimes fueled by donations, build optional modifications, such as roaring trains and fluttering butterflies, for the game. In the wake of the deal, some key independent developers told concerned colleagues it was irrational to fear the worst from Microsoft. After investing $2.5 billion — the general sentiment went — it wouldn’t be a smart move for Microsoft to cut off key fans, ignore the feedback that made the game a success or ban outside developers from profiting from “Minecraft.”
On YouTube, discussions of “Minecraft” are key to the success of several of the most popular YouTube channels, including SkyDoesMinecraft, StampyLongHead and Diamond Minecart.
SkyDoesMinecraft, for example, has more than 10 million subscribers, and videos of “Minecraft” gameplay regularly register seven-digit viewership. The channel, run by Adam Dahlberg, is part of the YouTube-channel network Machinima, which counts Warner Bros. as an investor.
Warner has tapped Roy Lee, part of the successful production team behind “The Lego Movie,” to work on a forthcoming “Minecraft” film, which offers lucrative merchandise potential. Toys, books and T-shirts inspired by “Minecraft” are already selling well, analysts said, and the game’s MineCon convention attracts thousands of fans.
“Minecraft” is also becoming popular in schools. It’s used in more than 40 countries as an education tool, Microsoft said. The game platform can be customized to create machines for physics projects or to model cells in biology.
Microsoft and Mojang executives said gamers, YouTube viewers and developers should expect no immediate change.
“ ‘Minecraft’ is more than a great game franchise — it is an open world platform, driven by a vibrant community we care deeply about, and rich with new opportunities for that community and for Microsoft,” Nadella said in a statement Monday.
In the long term, Microsoft’s technological expertise should lead to “richer and faster worlds, more powerful development tools and more opportunities to connect with the ‘Minecraft’ community,” said Phil Spencer, head of Microsoft Studios.
Analysts, however, do see some changes coming that could rile users. Xbox owners might get access to exclusive “Minecraft” content. And all players could be pushed to try other Microsoft games and apps, including Word and Excel.
Piers Harding-Rolls, director of gaming research at IHS, said “Minecraft” had strong engagement with people ages 8 to 14, “exactly the type of users Microsoft needs to connect with.” An estimated 65% of users are under 21, Microsoft said.
Supporting a game with a huge community of user-generated content around it is a “huge departure” for Microsoft but one that it will surely exploit, said Michael Pachter, who analyzes video game publishers’ stocks for Wedbush Securities.
“This is a title that should never stop,” he said. “Like Legos, you’ll never run out of new 7-year-old boys who are interested it.”
Twitter: @peard33
