Acquiring Success: Microsoft Buys Minecraft Dev for $2.5 Billion, Notch Leaves

Acquiring Success: Microsoft Buys Minecraft Dev for $2.5 Billion, Notch Leaves

Bloomberg and the Wall Street Journal report that Microsoft is in talks to buy Minecraft developer Mojang.

Microsoft has confirmed the purchase of Minecraft developer Mojang, with a statement from Xbox head honcho Phil Spencer. Spencer pledged that Microsoft would continue supporting Minecraft on non-Xbox platforms, but he gave no specifics. A post on the official Mojang blog clarified that statement and gave the total price of the deal: $2.5 Billion.

"At Microsoft, we believe in the power of content to unite people," Spencer wrote on Xbox Wire. "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."

"There’s no reason for the development, sales, and support of the PC/Mac, Xbox 360, Xbox One, PS3, PS4, Vita, iOS, and Android versions of Minecraft to stop," said Mojang.

Spencer also stated that Minecon will continue next year.

Mojang's statement seems to confirm part of the rumored reports, stating that founder Markus "Notch" Persson's heart just wasn't in running a major company. The post also states that three of Mojang's founders - Notch, managing director Carl Manneh, Scrolls lead designer Jakob Porser - are leaving the company to pursue other projects.

"Though it’s too early to confirm which of us will continue working on Minecraft or other projects, we predict that the vast majority (if not all) Mojangstas will continue to work at Mojang for the time being," said Mojang in its statement. "The founders: Notch, Carl, and Jakob are leaving. We don’t know what they’re planning. It won’t be Minecraft-related but it will probably be cool."

The surprising thing is Microsoft expects for Mojang to pay for itself by June 30, 2015, which is the end of its fiscal year. That seems like high hopes, but Minecraft has solid sales, a new PS4 version, and the continued sales of licensed skins and related merchandise.

"Microsoft expects the acquisition to be break-even in FY15 on a GAAP basis," said the company in its press release.

Original article: Last night, the Wall Street Journal reported that Microsoft was in "serious discussions" to buy Minecraft publisher Mojang for a cool $2 billion. If true, that would be the first major purchase Microsoft has made since new CEO Satya Nadella took control of the company.

This morning, fellow business news site Bloomberg released its own report on the matter, citing three anonymous sources. Microsoft and Mojang spokespeople have declined to comment. This doesn't confirm or deny the news, as I can't think of many companies would confirm ongoing business discussions. Oddly enough, Bloomberg's report also states that Minecraft creator Markus "Notch" Persson is the one that reached out to Microsoft and began talks. This part of the report is rather surprising as Persson previously spoke out against Microsoft's Windows 8 on Twitter.

"Got an email from Microsoft, wanting to help 'certify' Minecraft for [Windows 8]. I told them to stop trying to ruin the PC as an open platform," Persson previously tweeted. "I'd rather have minecraft not run on [Windows 8] at all than to play along."

This would be the first major purchase by new CEO Satya Nadella, who has a lot to prove.

Persson also decried Facebook's purchase of Oculus VR, but he later recanted on those statements. Notch's comments about Windows 8 were made two years ago and a lot can change in two years, so perhaps his feelings towards Microsoft have mellowed since then. It's worth noting that Persson hasn't said anything on Twitter or his personal blog since the reports were published.

Would this be a smart purchase by Microsoft? Probably. (Prepare for linkstorm.) Total Minecraft sales currently sit around 54 million, with PC and Mac versions totaling nearly 16 million, the Xbox 360 version accounting for 12 million, and the Pocket Edition crossing 21 million. Minecraft on PlayStation 3 and Xbox 360 are still on the NPD charts as of last month. Minecraft is also a licensing godsend for Mojang, through the sales of official Minecraft skins. Do you have a property that you want to promote? Why not release some Minecraft skins? That's why Mojang released Spider-Man skins around the same time that Amazing Spider-Man 2 hit theatres, and Doctor Who skins near this year's season premiere.

The game has a long tail, which probably would be good for Microsoft right now. Microsoft has $85 billion in cash-on-hand right now (for scale, that's nearly double what the U.S. Treasury holds), but it's been weathering a number of high-profile failures like the Surface and Windows Phone 8 and the slow adoption of Windows 8.

A new Nuts & Bolts is a great idea.

Why doesn't Microsoft just build a Minecraft competitor in-house instead of buying Mojang outright? Certainly Rare, the development studio behind the construction-platformer Banjo-Kazooie: Nuts & Bolts, is already owned by Microsoft. Given the freedom to make something beyond Kinect Sports, Rare could probably make a new Nuts & Bolts game to compete with Minecraft. It wouldn't honestly be on the same footing as Minecraft has passed into cultural phenomenon territory, but Microsoft would've made a solid try at competing.

But that's not how business works these days. Most large companies - Apple, Amazon, Google, Facebook, and Microsoft - tend to just buy up any possible competitors or innovators. That's not to say there's no internal innovation in those companies, but if there's someone outside of your expertise that provides a profitable service and you have the cash, why not just buy them out? That other company has a proven winner. Acquisitions side-step the major issues with Research & Development: it's expensive, full of failure, and you don't know if you'll have a winner at the end.

Major corporations just feel it's better to pony up the money and call it day. That's why Apple bought Beats Music for $3 billion, Facebook bought Oculus VR for $2 billion, and Amazon just purchased Twitch for $970 million. In each case, the corporations were interested in the technology, infrastructure, or personnel, and decided it was worth it to bring the entire company internal. That's big business.

Would Microsoft make Minecraft Xbox/Windows exclusive if the reported deal goes through? Doubtful, as the company has made numerous strides in being platform agnostic over the past few years. For Microsoft, the important thing is the huge userbase and consistent sales Minecraft provides. At most, Microsoft might make users transition over to its account system and you'd perhaps see more Xbox-specific skins or features in the future. For the most part, Microsoft would be buying Mojang to keep the developer running like it does right now.

Licensed skins are a solid revenue stream for Mojang.

So are the reports true? It's possible. Should we be worried about the future? I don't think so. If Microsoft wants Mojang for Minecraft, it also behooves them not to screw with the golden goose too much.

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Mike Williams

Reviews Editor

M.H. Williams is new to the journalism game, but he's been a gamer since the NES first graced American shores. Third-person action-adventure games are his personal poison: Uncharted, Infamous, and Assassin's Creed just to name a few. If you see him around a convention, he's not hard to spot: Black guy, glasses, and a tie.

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