My Thoughts on Technology and Jamaica: US$2.5 billion purchase of Mojang by Microsoft - How Minecraft will help Microsoft to build on Xbox Success

Friday, September 26, 2014

US$2.5 billion purchase of Mojang by Microsoft - How Minecraft will help Microsoft to build on Xbox Success

“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 CEO Satya Nadella statement on the purchase of Mojang and their successful indie-game title, Minecraft

It’s only fitting after all, considering that they already have their own Gaming System, the Xbox.

I’m of course referring to Microsoft’s purchase of  Mojang and their indie-hit game, Minecraft for US$2.5 billion dollars as announced in the article “Microsoft Makes $2.5 Billion Gamble On Indie Hit 'Minecraft'”, published  9/15/2014 @ 12:23PM by Erik Kain, Forbes and “Microsoft to buy Minecraft maker Mojang for $2.5B”, published September 15, 2014 6:12 AM PDT by Ian Sherr, CNET News.

Mojang marks the first major acquisition under the leadership of Microsoft CEO Satya Nadella and already it has many confused. This as albeit Minecraft is a popular Video game, the rationale for spending so much money on a single Video game studio and Video game title seems strange. Especially as it’s his first major acquisition as CEO.

As for Mojang, they seem to be taking the acquisition well. They plan to move on to develope new Projects, as five (5) years of doing the same thing since 2009 does get a little boring, to quote Mojang CEO Carl Manneh: “The ‘Minecraft’ players have taken the game and turned it into something that surpassed all of our expectations. The acquisition by Microsoft brings a new chapter to the incredible story of ‘Minecraft. As the founders move on to start new projects, we believe the high level of creativity from the community will continue the game’s success far into the future”.

Even the Minecraft creator Markus “Notch” Persson was nonchalant, say it was more about moving on with his life and not so much about the money, big words for someone already making millions from a game he made for the fun of Gaming as stated in the article “'Minecraft' Creator On $2.5 Billion Deal: 'It's Not About The Money'”, published 9/15/2014 @ 11:23AM by Dave Thier, Forbes

So who did Microsoft make this odd move?

Microsoft purchases Minecraft – US$2.5 billion a coup for the 40-employee strong Swedish Company

It’s good to take a look at the history behind what’s been a great five (5) year run for the Mojang Team at this point.

Mojang’s is a Swedish based Game developer led Swedish Game Developer Markkus “Notch” Persson who started Mojang with his first set of employees in September 2009 as chronicled in my Geezam blog article entitled “MineCraft – Indie hit is Social Gaming’s Cinderella”.

They’ve grown from strength to strength ever since making an app for Minecraft for the Apple iPhone and the Apple iPad and getting immortalized in LEGO Bricks since December 2011 as explained in my Geezam blog article entitled “Minecraft Apple iPhone and iPad making brick building Games Social”. It’s around this time he relinquished the leadership role to Mojang's Jens Bergensten as the game gradually gained a huge following.

Even the Brits have taken a liking to Minecraft, with the Great Britain's Governmental-mapping Agency Ordnance Survey, recreating the Entire Country of Great Britain within the game in September 2013 as explained in my Geezam blog article “Map of Great Britain in Minecraft is a Brick Builders Dream Landscape made Real”.

Now, quite fittingly, Warner Brother in February 2014 has announced plans to make a Minecraft movie after the success of the Lego Movie as explained in my Geezam blog article “Warner Brothers to make MineCraft movie following Success of The Lego Movie”.

Their loyal followers have grown on almost all gaming platforms in 2014 according to the article “MineCraft passes 100 million registered users, 14.3 million sales on PC”, published February 26, 2014 by Eddie Makuch, GameSpot

1.      100 Million Users
2.      14.3% or 14.3 million have purchased the Game
3.      10 million copies each downloaded from the Google Play Store and the Apple iTunes store
4.      1 million copies have been downloaded on the PlayStation 3 since December 2013 Launch

To their loyal followers, Mojang had this to say on their blog, quote: “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. Minecraft will continue to evolve, just like it has since the start of development. We don’t know specific plans for Minecraft’s future yet, but we do know that everyone involved wants the community to grow and become even more amazing than it’s ever been. Stopping players making cool stuff is not in anyone’s interests.”

Thus this recent purchase of their company, some five (5) years later for US$2.5 billion, while being an odd move by Microsoft CEO Satya Nadella as it’s a non-core product as it relates to Microsoft’s business, is a coup for the 40-employee strong Swedish Company!

Microsoft is buying the Minecraft Universe – Reaching potential future gamer to build on Xbox Success

Minecraft makes some US$129 million in profit in 2013 according to figures presented in the article “Minecraft Is Still Generating Insane Amounts of Cash for Developer Mojang”, published March 18, 2014 by Victor Luckerson, TIME.

At that rate, it would take Mojang 20 years to make back Microsoft’s investment in their company. Then again, former Microsoft CEO Steve Balmer’s purchase of struggling Finnish phone maker Nokia for US$7 billion is just as bad and possibly worse as noted in “Xbox Not A 'Core' Part Of Microsoft's Business CEO Says”, published 7/15/2014 @ 4:11PM by Erik Kain, Forbes

Nokia shows no signs of their Windows Phone powered Lumia series smartphones making serious inroads into the highly competitive consumer smartphone market that currently ruled by Google Android and Apple as noted in my blog article entitled “IDC Stats for Second Quarter of 2014 points to Asian Smartphone Rise – How cheaper smartphones are slowly killing BOTH Apple and Samsung marketshare”.

Thus if the Microsoft CEO Steve Balmer can make such a huge gamble on Video Games, especially given their profitability potential as noted in on my blog article entitled “Netzoo's 2014 Global Games Market Report - Developed World idle time Opportunity for Jamaicans in Video Gaming Design”, then Microsoft CEO Satya Nadella gamble is a safe bet by comparison as Mojang’s Minecraft community shows signs of growing, especially among Teenagers (ages 13 to 17)!

So in summary, Microsoft has invested in a company that’s not only poised for growth but with a loss less cash than a typical company. This, folks isn’t a real gamble. It’s a safe bet on a game which has little challenge in its little niche and is set for growth all the way for the next 20 years.

Whether or not Microsoft will make a profit is another thing. But Mojang isn’t a loss making entity that they’ll have to pump billions into to make it profitable like Nokia, so by comparison, this will work our quite handsomely for them. Best of all, it taps into that Teenagers (ages 13 to 17) gaming segment that they’ve long ignored.

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