Microsoft is paying $US2.5 billion for Mojang Studios, the company behind Minecraft.
Why is Microsoft doing it? We spoke with someone at the company who could explain Microsoft’s thinking. Here’s what we were told.
First and foremost, this is a solid acquisition from a financial perspective. For $US2.5 billion, Microsoft is buying a growing, profitable business that has an engaged userbase.
Mojang is a Swedish company, so many people were speculating that Microsoft was buying the company to use its off-shore cash that is otherwise sitting around. If Microsoft brings the cash to the US then it takes a tax hit. We were told that this is not really a big factor. If this company was in the US, Microsoft would have bought it.
Kids are crazy about Minecraft, which is like a digital version of Legos. In Minecraft, users just build up new worlds. In the gaming world it’s called “a sandbox game.” You craft environments. It’s like model building, but in a virtual environment.
While it seems like a strange fit at Microsoft, it’s actually a piece of the vision of new CEO Satya Nadella. In July, Nadella published his vision for Microsoft in a 3,200 word manifesto. In that manifesto, he talked about the importance of gaming.
“As a large company, I think it’s critical to define the core, but it’s important to make smart choices on other businesses in which we can have fundamental impact and success,” said Nadella. “The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming.”
Buy acquiring Mojang, Nadella is going deeper into gaming. He’s getting an “anchor tenant” for Microsoft’s suite of digital properties. Minecraft is a popular game that could be on the home screen of millions of computer users around the world. That’s exactly the sort of property that Microsoft wants to own.
While Minecraft technically fits in the “video game” category, the truth is that it’s more like a social network. Zynga, and the companies behind Candy Crush, and Angry Birds are video game companies, and they have risen and fallen pretty quickly. Those games are built and controlled by a small group of people.
With Minecraft, it’s an open world and users contribute content making the game grow. Just like Twitter is enhanced through user generated content, so is Minecraft.
There’s one other reason for Microsoft to buy Minecraft that not many people are talking about. It is growing in popularity in the education space. Teachers are using it with their students and there is a dedicated group to focusing on education.
As that grows, it gives Microsoft access to a young demographic.