Minecraft owner Mojang is a perfect fit for Microsoft's ambitions
Microsoft's move to buy Minecraft developer and owner Mojang for $2.5 billion may come as a surprise to the game's more fervent fans, but it is rooted in commercial, if not cultural, sense. The news robustly dismisses the idea that games are no longer at the core of Microsoft's strategic direction and also underlines the growing importance of independent titles alongside big-budget games.
Minecraft is arguably the best-positioned independently-owned IP across the games sector today. While it has already generated over 54 million games sales and revenues approaching $500m, Minecraft is a franchise built to last, making the likely heavy investment required to secure Mojang significantly less risky than many other recent acquisitions within the games or app sectors.
It's also clear that Xbox users love Minecraft, having seen the game come to Xbox 360 first out of the consoles in 2012. Across its console iterations, the Xbox 360 version at over 12 million has heavily outsold all other versions, underlining that if future iterations or expansions of Minecraft are made exclusive, that the company already has a large legion of fans to work with across its own devices.
Key benefits to Microsoft include:
* A very strong brand awareness and engagement with younger gamers aged between 8-14 years. These are exactly the type of users Microsoft needs to connect with and turn into its consumers and brand ambassadors of tomorrow.
* Minecraft is a game that has sold well across a variety of devices and screens, both games-dedicated and non-specialist. There are few games that are able to sit comfortably on different types of device and still connect with a variety of use cases. As such, Minecraft is valuable to Microsoft as a title that aligns strongly with the company's device ecosystem strategy across smartphones, tablets, consoles and PC.
* While Minecraft is considered an independent title, its continued presence at the top of the Xbox Live game sales charts highlights its importance as part of the console value proposition. Exclusivity for Microsoft will give the company further ammunition to compete more heavily with Sony.
* Minecraft is a franchise that has already exhibited longevity driven largely by its sandbox nature, feature updates and user generated content. The PC version of the game was released towards the end of 2011, the user base remains engaged and the game continues to sell across a wide number of platforms. The franchise also has room to more actively expand into new emerging markets, such as China. This longevity bodes well for ongoing and consistent sales.
The Minecraft IP is also well positioned to be leveraged into adjacent licensing based markets. Mojang has already made some headway here including securing a movie deal with Warner, licensing to toy and merchandising partners, and establishing a book-related licensing deal with Egmont. It was recently reported that Egmont had sold 8.2 million Minecraft related books. Both Microsoft and Mojang share an ambition to widen the role of games in education and Minecraft's creative, sandbox and random nature fits this vision well.
A note of caution
There has been some understandable consternation in response to this rumour (and now confirmed acquisition) from some of the most vocal fans across the Minecraft community. Part of this is related to the threat of exclusivity on Microsoft-related devices, or future changes to the Minecraft experience but it is also a response to the potential acquisition of a fervently independent developer by a company of the scale of Microsoft.
If the acquisition comes to fruition, Microsoft's challenge will be to maintain the spirit of Minecraft while developing the franchise in a commercially meaningful way. With around 40 employees at Mojang, this is the sort of acquisition which can easily get lost in a huge organisation like Microsoft, and this factor is probably the main threat to longer term success.