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Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

September 15, 2014 at 6:38 AM

Microsoft buys Minecraft maker Mojang for $2.5 billion

It’s official: Microsoft said Monday morning that it’s buying Mojang, maker of the popular “Minecraft” video game, for $2.5 billion.

The Mojang team will join Microsoft Studios, maker of games such as the “Halo” and “Forza” franchises, according to a Microsoft news release.

“Microsoft’s investments in cloud and mobile technologies will enable ‘Minecraft’ players to benefit from richer and faster worlds, more powerful development tools, and more opportunities to connect across the ‘Minecraft’ community,” the company said in the news release.

Microsoft said it expects the acquisition, which is expected to close in 2014, to be break even in fiscal year 2015.

“Minecraft” has had more than 100 million downloads on PCs alone since its launch in 2009, is the most popular online game on Xbox, and the top paid app on the iOS and Android platforms in the U.S., Microsoft said.

“The ‘Minecraft’ community is among the most active and passionate in the industry, with more than 2 billion hours played on Xbox 360 alone in the past two years,” the company said in the news release. “Minecraft fans are loyal, with nearly 90 percent of paid customers on the PC having signed in within the past 12 months.”

Microsoft also touted the appeal as “Minecraft” as as a platform rather than just a stand-alone game such as Angry Birds — with the ability to build modifications to the game driving up user engagement.

“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,” CEO Satya Nadella said in the news release.

Phil Spencer, head of Xbox and Microsoft Studios, said in a blog post Monday morning:

We respect the brand and independent spirit that has made Minecraft great, and we’ll carry on the tradition of innovation to move the franchise forward. … 

Minecraft adds diversity to our game portfolio and helps us reach new gamers across multiple platforms. Gaming is the top activity across devices and we see great potential to continue to grow the Minecraft community and nurture the franchise. That is why we plan to continue to make Minecraft available across platforms – including iOS, Android and PlayStation, in addition to Xbox and PC. 

Microsoft is also interested in seeing if “Minecraft” can reach new audiences in schools, according to someone with knowledge of the matter. There are already modifications to the game, at MinecraftEdu, that are currently in use in classrooms.

Mojang is a small, independent game developer studio based in Stockholm, Sweden. Last year, the company made a profit of 816 million Swedish kroner ($128 million) on 2.07 billion kroner in revenue ($360 million), according to The Wall Street Journal, which first reported last week that Microsoft was considering the purchase.

“Change is scary, and this is a big change for all of us,” the Mojang team wrote in a blog post Monday morning, seeking to reassure the community of “Minecraft” players. “It’s going to be good though. Everything is going to be OK.”

Mojang agreed to be acquired, the game studio said in the blog post, because “Minecraft has grown from a simple game to a project of monumental significance. Though we’re massively proud of what Minecraft has become, it was never Notch’s intention for it to get this big.”

Markus Persson — known by gamers as “Notch” — is the creator of “Minecraft” and is Mojang’s majority shareholder. According to the Mojang blog post, Notch decided:

He doesn’t want the responsibility of owning a company of such global significance. Over the past few years he’s made attempts to work on smaller projects, but the pressure of owning Minecraft became too much for him to handle. The only option was to sell Mojang. …

There are only a handful of potential buyers with the resources to grow Minecraft on a scale that it deserves. We’ve worked closely with Microsoft since 2012, and have been impressed by their continued dedication to our game and its development. We’re confident that Minecraft will continue to grow in an awesome way.

The company said it expects most of Mojang’s employees to remain there for the time being, though Mojang’s three founders — including Persson — are leaving.

This is Nadella’s first major acquisition since becoming Microsoft CEO in February.

In a July memo, in which Nadella outlined his vision for the company, he said the company would focus on “digital work and life experiences that are reinvented for the mobile-first and cloud-first world.”

“The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming,” he said in the memo.

Given Nadella’s vision, the “Minecraft”/Mojang acquisition is important to Microsoft’s mobile strategy, IDC analyst Al Hilwa said in an email Monday morning.

Hilwa continued:

Microsoft is a mobile ecosystem owner and has no choice but to keep building it if it is to maintain its relevance in the long term. … Minecraft strengthens Microsoft’s hand in the battle with Google, Apple and Amazon. … Minecraft is a solid business with intense user loyalty. That it can be purchased with overseas cash is also a part of the attraction, but its strategic value is that it is another brick fortifying Microsoft’s consumer services, a key lever in its mobile relevance. Gamers on other platforms will demand Minecraft for some time to come…

Successful and sticky games like Minecraft are powerful strategic consumer services for their owners. Microsoft is wise to build up its services assets to make its mobile platform more compelling.

 

 

 

Comments | More in Microsoft | Topics: microsoft studios, minecraft, mojang

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