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Microsoft Agrees To Buy "Minecraft" Creator For $2.5 Billion

Microsoft acquires Stockholm-based Mojang.

Posted on September 15, 2014, at 9:24 a.m. ET

Update — Sept. 15, 12:37 P.M. ET

Microsoft has announced that it has acquired Stockholm-based games developer Mojang — the company behind Minecraft — for $2.5 billion.

Since its release in 2009, Minecraft has become one of the most popular games of all time, with more than 100 million downloads on PC alone. Reports that Microsoft were looking to purchase Mojang surfaced last week. This isn't the first acquisition offer Mojang has fielded, as BuzzFeed News earlier reported the company had been in discussions with a number of firms at a $1 billion price around 2012.It is Microsoft's largest acquisition since new CEO Satya Nadella took over from Steve Ballmer in February. As part of the acquisition, the founders of Minecraft, including creator Markus "Notch" Persson, will be leaving the company."It’s not about the money," Persson wrote on his personal blog about the acquisition. "It’s about my sanity." Persson, at the time, had taken on a number of other projects, including one called "0x10c" — which, at the time of the acquisition, was believed to be shelved.Other large gaming firms have been snapped up at billion-dollar price tags recently. Amazon last month bought Twitch, a site that streams people playing video games, for nearly $1 billion. Facebook also spent $1 billion to buy Oculus Rift, the makers of a head-mounted virtual reality camera initially built for video games. Mojang, however, already represents a significant revenue source for Microsoft given that it is already making a good amount of money off the sales of Minecraft.The large community that surrounds Minecraft is seen as a significant contributor to Mojang's value. In 2013, the company reportedly made $128 million in earnings off roughly $291 million in revenue. According to one person familiar with Microsoft's thinking around the acquisition, this was a significant draw, giving Microsoft not only a source of immediate revenue but a highly-engaged user base it can work with right away.This source also pointed to Nadella's focus on gaming as a core competency for the company. That goes beyond just its console, the Xbox One, and Minecraft is seen as being integral to driving all of Microsoft's platforms — PC, tablet, phone and console — as a core gaming platforms, according to this source. At the time of the acquisition, Minecraft was one of the top-grossing iPhone and Android apps on the respective stores.The acquisition is also as much about the ecosystem that has sprung up around the game — including a massive and organically built fan club around the game that basically does the marketing for the game itself and continues to build out new content for the game. Other large gaming properties are centered around the games, like Angry Birds, but Minecraft itself is seen as a kind of virtual set of legos with nearly limitless possibilities, and the potential longevity of that kind of a game was what attracted Microsoft, according to this source.Lastly, the source pointed out that Microsoft already has a presence in the education space through MicrosoftEDU. Minecraft is a popular game among younger players, and is actually often used in educational situations. The game could be leveraged to get people interested in Microsoft in a new way, the source said.
Nick Adams / Reuters

Since its release in 2009, Minecraft has become one of the most popular games of all time, with more than 100 million downloads on PC alone.

Reports that Microsoft were looking to purchase Mojang surfaced last week. This isn't the first acquisition offer Mojang has fielded, as BuzzFeed News earlier reported the company had been in discussions with a number of firms at a $1 billion price around 2012.

It is Microsoft's largest acquisition since new CEO Satya Nadella took over from Steve Ballmer in February. As part of the acquisition, the founders of Minecraft, including creator Markus "Notch" Persson, will be leaving the company.

"It’s not about the money," Persson wrote on his personal blog about the acquisition. "It’s about my sanity." Persson, at the time, had taken on a number of other projects, including one called "0x10c" — which, at the time of the acquisition, was believed to be shelved.

Other large gaming firms have been snapped up at billion-dollar price tags recently. Amazon last month bought Twitch, a site that streams people playing video games, for nearly $1 billion. Facebook also spent $1 billion to buy Oculus Rift, the makers of a head-mounted virtual reality camera initially built for video games. Mojang, however, already represents a significant revenue source for Microsoft given that it is already making a good amount of money off the sales of Minecraft.

The large community that surrounds Minecraft is seen as a significant contributor to Mojang's value. In 2013, the company reportedly made $128 million in earnings off roughly $291 million in revenue. According to one person familiar with Microsoft's thinking around the acquisition, this was a significant draw, giving Microsoft not only a source of immediate revenue but a highly-engaged user base it can work with right away.

This source also pointed to Nadella's focus on gaming as a core competency for the company. That goes beyond just its console, the Xbox One, and Minecraft is seen as being integral to driving all of Microsoft's platforms — PC, tablet, phone and console — as a core gaming platforms, according to this source. At the time of the acquisition, Minecraft was one of the top-grossing iPhone and Android apps on the respective stores.

The acquisition is also as much about the ecosystem that has sprung up around the game — including a massive and organically built fan club around the game that basically does the marketing for the game itself and continues to build out new content for the game. Other large gaming properties are centered around the games, like Angry Birds, but Minecraft itself is seen as a kind of virtual set of legos with nearly limitless possibilities, and the potential longevity of that kind of a game was what attracted Microsoft, according to this source.

Lastly, the source pointed out that Microsoft already has a presence in the education space through MicrosoftEDU. Minecraft is a popular game among younger players, and is actually often used in educational situations. The game could be leveraged to get people interested in Microsoft in a new way, the source said.

Gaming is a top activity spanning devices, from PCs and consoles to tablets and mobile, with billions of hours spent each year. 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.

Microsoft's head of Xbox, Phil Spencer, said: "We are going to maintain ‘Minecraft’ and its community in all the ways people love today, with a commitment to nurture and grow it long into the future.”

Minecraft to Join Microsoft http://t.co/gGujRVcj67

Phil Spencer@XboxP3

Minecraft to Join Microsoft http://t.co/gGujRVcj67

2:02 PM - 15 Sep 14ReplyRetweetFavorite

Change is scary, and this is a big change for all of us. It's going to be good though. Everything is going to be OK. <3Please remember that the future of Minecraft and you – the community – are extremely important to everyone involved.

You can watch Microsoft's Phil Spencer discussing the acquisition here:

View this video on YouTube

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