Did you buy anything interesting today? Like some new shoes? Maybe a new phone? How about a $2.5 billion dollar game developer? That’s exactly what Microsoft paid for today when it acquired Minecraft developer Mojang.
The move is somehow puzzling and yet logical, too. Minecraft is a huge hit across multiple platforms. It has sold nearly 54 million copies as of June. But why would Microsoft spend so much for, essentially, one game? We gathered thoughts from multiple industry analysts to try to come up with some answers.
“Microsoft’s move to buy Minecraft developer and owner Mojang for $2.5 billion may come as a surprise to the game’s more fervent fans, but it is rooted in commercial, if not cultural, sense,” analyst Piers Harding-Rolls from IHS Technology wrote in a note sent to GamesBeat. “The news robustly dismisses the idea that games are no longer at the core of Microsoft’s strategic direction and also underlines the growing importance of independent titles alongside big-budget games.”
Microsoft has always had a strong portfolio of triple-A games thanks to franchises like Halo and Gears of War, but it’s had a hard time reaching an audience outside that demographic. The motion-tracking Kinect was a success for a time, but consumers are losing interest in the Xbox One version of the camera. Minecraft, however, already has a built-in fan base that extends beyond the hardcore crowd.
It also makes a lot of money.
“Minecraft is the most lucrative standalone download on XBLA (Xbox Live Arcade) since its launch,” International Data Corporation gaming research director Lewis Ward told GamesBeat. “I believe that it is the No. 1 grossing game that Microsoft has had. So, from that perspective, it’s pretty obvious why they would want it just on the Xbox platform.”
Ward explained that Microsoft is looking to extend the Xbox experience to PC, mobile, and all of those screens. Minecraft is a huge hit on all of those platforms, so it makes sense for Microsoft to acquire it.
“The bottom line is that this deal shows that content is still king,” analysts Ben Schachter and John Merrick from Macquarie Capital wrote in a note sent to GamesBeat. “From Microsoft’s perspective, however, we are surprised at the size of the deal. It is hard to understand how this will be worth it for Microsoft given [that] No. 1, consumers could rebel if the content is not available on non-Microsoft platforms — it’s currently on PC, iOS, Android, Xbox, and PlayStation platforms — No. 2, founders are leaving, and No. 3, the significant price paid.”
So the benefit to Microsoft is obvious, but it’ll have to maintain Mojang’s positive image with the gamer community. Many people perceive Mojang as a stand-out independent studio with a likeable developer, Markus “Notch” Persson, in charge. However, with Persson leaving and the company’s independent moniker now gone, Minecraft fans could potentially become cynical toward the brand, which would make it much harder for Microsoft to turn its $2.5 billion investment into a profit.