Microsoft Gobbles Up Minecraft Creator Mojang For $2.5 Billion

Posted on Sep 16 2014 - 4:39pm by Devesh
Mojang's Minecraft Game Cover For Xbox 360

Mojang’s Minecraft Game Cover For Xbox 360

Microsoft Corp. has agreed to buy Mojang, the company behind the popular Minecraft video-game, for $2.5 billion. The deal will give Microsoft a young and loyal following. This is the first and unusual acquisition for Satya Nadella, who is now Microsoft’s Chief Executive Officer. Satya Nadella believes that it is now time for the company to double down on what Microsoft does best. Microsoft’s forte has always been selling software to others.

The acquisition will leave, Markus Persson, the 35-year-old programmer who created Minecraft a whole lot heavier with all the cash he is going to make. Markus Persson is now somewhat of a cult hero for the independent game community. Mojang, the Minecraft creator, has earned more than $100 million as profits. The profit is by selling the Minecraft game and related merchandise. Mojang, has just 40 employees. Markus Persson and other two executives are the company’s shareholders and board members.

The video-game Minecraft, was introduced in 2009. It has, till date, sold more than 50 million copies for PCs, video-game consoles, and smartphones. The main drawn is in terms of middle-school children and veteran video-gamers who are eager to build sprawling digital worlds with Lego-like virtual blocks. The Minecraft brand has licensing deals with Lego for toys, Scholastic for handbooks, and Warner Bros. for an upcoming feature film.

Minecraft quickly rose from a hit cult game to become the target of one of the world’s largest mega-corporations. This just shows how other forms of entertainment, especially that of smartphones or tablets and other emerging computing devices are slowly taking over the media and technology industries. Some of these companies, that didn’t exist years ago, like Mojang, Oculus Rift, and WhatsApp, have all been sold for multibillion-dollar prices.

Microsoft’s Xbox business is a secondary focus for CEO, Mr. Nadella, but now he’s emphasizing on how games have become the most popular activities on smartphones and tablets other than PCs and video-game consoles. Microsoft’s new ownership of Minecraft will give people an extra incentive to secure its Xbox video-game console, PCs, smartphones, and tablets among others.

Mojang is very important to Microsoft’s struggling smartphone and tablet business. Minecraft is one of the most popular mobile applications. The irony is that Mojang hasn’t made it for Microsoft’s Windows Phone OS, which is on just 2% to 3% of smartphones or tablets sold worldwide. An analyst for Nomura, Rick Sherlund, believes that Microsoft would be looking to capitalize this purchase by making unique and/or exclusive Minecraft content for its Xbox or Windows Phone.

The acquisition isn’t seen as a financial risk to Microsoft. Microsoft’s operations generate that much cash in roughly a month. The risk is, however, of alienating investors and some loyal customers of the video-game.

Most Microsoft stockholders are still very annoyed at the $9.5 billion acquisition of Nokia’s phone-and-tablet operations. Steve Ballmer, Satya Nadella’s predecessor, agreed to the deal and saw it through. It is now the new CEO’s job to properly and profitably harness Nokia into helping Microsoft play catch-up and overcome the Google Android craze in smartphones and tablets alike.

Only time will tell how things will change, either for the better or for the worse.

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