A look at Microsoft's Minecraft acquisition and video game trends (Part 1 of 7)
Microsoft acquires popular game developer Mojang
In September 2014, Microsoft (MSFT) announced its acquisition of Mojang, a Swedish company popular for its game Minecraft, for $2.5 billion. It’s one of the most popular online games on Xbox and the top paid app for iOS and Android in the U.S. Minecraft is accessible on all platforms, including Apple iOS (AAPL), Google (GOOGL) Android, and Sony (SNE) PlayStation in addition to Xbox and PC. Since its launch, Minecraft has seen more than 100 million downloads on the PC alone.
Minecraft was developed by Markus Persson. Persson, Carl Manneh, and Jakob Porser—the other co-founders—won’t be part of Minecraft after the acquisition.
The above chart shows the sales of leading video game console developing companies. Sony leads the space. It’s followed by Nintendo (NTDOY) and Microsoft.
The Minecraft acquisition is expected to be a boon for Xbox, Microsoft’s popular gaming console. Demand for consoles as a gaming device is decreasing, but consoles are still the most popular platform for gaming.
Minecraft earned ~$326 million revenues and $128 million profits in 2013. The majority of Mojang’s revenues—~90%—came directly from Minecraft sales, while the PC version of the game contributed ~38% to overall revenues. The Xbox 360 and PS3 contributed 30%. Mobile versions of Minecraft contributed approximately 25% to the company’s overall revenue.
In June 2014, the company reported that it sold 54 million copies across multiple platforms. According to Microsoft’s CEO, Satya Nadella, the Minecraft acquisition is expected to complete by the end of fiscal 2014 and break even in fiscal 2015.
Mojang to benefit from Microsoft’s increased presence in the cloud and mobile space
Mojang will function along with Microsoft Studios. Halo, Forza, and Fable are the game franchises under Microsoft Studios.
Microsoft’s increased investments in the mobile and cloud spaces are expected to benefit Minecraft players, as they’ll now have access to Microsoft’s development tools and enhanced opportunities to connect across the Minecraft community.
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