top | item 8318506

Yes, we’re being bought by Microsoft

941 points| jordanmessina | 11 years ago |mojang.com

515 comments

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[+] gokhan|11 years ago|reply
For people without children, here are some quick notes on the situation in kiddieland:

- My son is 7. We bought iPad edition first, shelled some more for PC edition last month, and I'm sure I'll be forced to buy more in the future if MS puts a price tag on it.

- I spend a fair amount of time during weekends for deciphering the modding world, trying to find something called CraftBukkit, learning to mod, finding launchers, finding maps shown on some Youtube video etc. because the son is mad about it. BUT, he's spending hours trying to learn JS (ScriptCraft on Bukkit) just to make an exploding arrow. I truly believe this is analogous to C64 days back then.

- School started today, he's moved to another school this year. The first thing he asked to his news friends was about Minecraft. Then he advertised how PC version is superior to the one on iPad.

- My 2 yo daughter knows what Minecraft is, tells she'll play Minecraft when she grows up.

- While we were shopping for school supplies last week, saw two people asking for Minecraft licensed school bags for their kids.

- We live in Turkey.

[+] aresant|11 years ago|reply
"Minecraft is digital Lego . . . We only wish we had invented it." - Lego's marketing director. (1)

I think that's an interesting quote to understand both the generational appeal of Minecraft and why the deal makes sense.

Continuing the lego comparison, Lego was recently valued at ~$15b (2) and I think that also demonstrates the potential here.

Lego mastered the IP licensing biz (lego star wars, batman), merchandising (theme parks, etc), distribution (market specific sets etc).

I'm almost surprised that Disney wasn't the acquirer but I imagine that with a corporate profiteer behind Mojang we'll see significant expansion of the brand.

(1) http://www.atbmedia.com/lego-we-wish-wed-invented-minecraft/

(2) http://www.bloomberg.com/news/2013-03-13/lego-builds-new-bil...

[+] jballanc|11 years ago|reply
> - We live in Turkey.

Merhaba Bodrum'dan!

I'm reminded of a refrain that seems to be going around recently: the computer revolution is just getting started.

When people today talk of how computers can empower change, often they're thinking about getting better taxi service. In reality, there are entire cultures that have yet to fully engage in the revolution. With Turkey in particular, I am so excited by the possibilities. Turks have such a natural hacker-mindset, it's just that thus far it's been mostly limited to "real-world" hacking. Imagine what can happen when a population that is naturally curious and creative is given tools to effect great change.

At the same time, for this reason I'm wary of Microsoft as the buyer. In many parts of the world, Microsoft successfully monopolized business and personal computing, but even at their highest height they never fully monopolized developer mindshare. Contrastingly, Turkey's developer community was effectively "colonized" by Microsoft such that, if you were a programmer in Turkey it was just assumed that you worked with Microsoft technologies. That is starting to change...and I wonder if that doesn't cause Microsoft some small amount of concern.

I think it's not an exaggeration to say that how Microsoft serves as steward of the Minecraft community will be telling as to whether they've changed their ways, and are willing to be participants in a larger community, or whether they remain the Microsoft of old.

[+] apetrovic|11 years ago|reply
I have two girls, 5 and 8 years old. Minecraft craze started a year ago. Just like you, I bought iPad edition first, and after that I paid for two licenses, so my daughters can play hide and seek inside Minecraft. I was amazed seeing my younger daughter, 4 years old at the time, moving flawlessly in 3D world, hiding from her sister, or building structures.

And just like you, I spent enormous amount of time learning about Minecraft mods.

BTW, I live in Serbia.

[+] jacquesm|11 years ago|reply
That's 2.5 Instagrams, or 0.33 Nokias. What do you feel, realistic, too much, too little?

Personally I feel this makes (much) more sense than instagram, these guys have a very loyal following, a tremendously strong product and actually make money.

Congratulations to everybody on the selling side in this deal, too bad it had to be Microsoft but with amounts like that there are not too many companies on the acquiring side.

Does anyone know if this was stock / cash / a mix?

edit: this Microsoft - Mojang deal will do more to get people into (games) programming than a million $ adspend by codecademy would

edit2: right now (16:43 my time) microjang.com is still free

Wonder how long it will take before that is a registered domain.

edit: microjang.com is now no longer free.

   Registrant:
      Microjang Development (DR is US)
      PO Box 100439
      NY, NY 10163-4668
      US (UNITED STATES)
[+] _delirium|11 years ago|reply
It feels pretty reasonable to me, unless you think that it's a flash-in-a-pan that will decline fairly soon. If you think it's a franchise brand that will either hold steady or grow, then it's not really a huge purchase price. Mojang has profits of somewhere around $100-150m on revenues of $300-400m, so this values them at 15-25x profits, or 6-9x revenues, both of which are lower than most recent major tech purchases (e.g. Google paid something like 10-12x revenues for Nest). Heck, a 15-25 P/E ratio isn't even out-of-line for an established tech company without huge growth expectations (Intel and Microsoft both trade around 20).

The terms seem pretty generous, though, a completely clean buyout with no requirement that the principals stay for even a little bit.

[+] jtbigwoo|11 years ago|reply
>> That's 2.5 instagrams. What do you feel, realistic, too much, too little?

I don't think there's the revenue growth potential in Minecraft like there is in Instagram. On the other hand, Mojang made $330 million in revenue and $129 million in profit last year. They can probably hold on to those margins because their sales system doesn't share revenues with retailers or distributors (or Valve, Google, or Apple for that matter).

The interesting question is whether Minecraft has legs to continue selling for ten or twenty more years. I think it might. I know lots of parents that don't let their kids play video games except for Minecraft. When I pick my kids up from school, I always see a handful of kids wearing Minecraft shirts and carrying Minecraft lunch boxes. It could become like Lego--a toy that's viewed as educational and beneficial by parents.

If I was Microsoft, I'd do two things: First, I'd work on performance and clean up the presentation a bit, especially on the loading screens and menus. Second, I'd roll out a service to make it easy for parents to set up a locked-down server for their kids. You wouldn't believe the number of parents who have asked me for help in setting up a Minecraft server for their kid and his/her friends. I finally stopped showing them because it's too complicated for them to keep running. A service that cost $4.95/month and was reputable, simple, and secure could make a killing.

[+] weavie|11 years ago|reply
A large majority of this very loyal following are still < 16 years old. If MS play things right and can retain this following in about 5 years time it will be a very loyal following with a huge reserve of disposable cash then this could become a very profitable move indeed.
[+] jib|11 years ago|reply
They're buying an IP for the future. Attached to that they also get a company with some staff (some of which are excellent at what they do).

If they have a solid idea of how they want to use the IP, it makes sense. It also comes with a massive risk though - it will be very easy for them to "be the guys who ruined Minecraft".

I imagine it will need to be something like "stay very hands-off for a significant amount of time to prove that they didnt in fact ruin it" followed by some way of turning it into a link in and value add for their existing products rather than something that they sell expansions/new stand-alones for.

Something like Minecraft being the Tetris/Solitaire of the 2010s or so? It comes pre-loaded with their OS's, create a great experience on surface tablets etc, trying to turn it into "the new Microsoft gives you cool stuff and makes it open for everyone" to position Microsoft as the open alternative to the more closed environments of Google and Apple?

I dont see how the purchase makes sense from a money-making point of view today - the Mojang crew hasn't proven they can do repeated success with new IPs, but I could totally see it making sense from a holistic point of view - successful integration of Minecraft in the Microsoft universe could add significant value to Microsoft as a whole.

[+] bane|11 years ago|reply
Insanely profitable, established and growing viral user base. The valuation feels a little high, but not complete insanity made out of unicorn farts and fairy dust.
[+] penprog|11 years ago|reply
It's realistic. Minecraft is this generations pokemon. In fact I think it's bigger. Not only boys but a significant amount of girls play it. Not only does it have cultural value it also makes money (which instagram doesn't)
[+] InclinedPlane|11 years ago|reply
I think it's reasonable. Minecraft is one of the most popular games in history, period. That says a lot right there. Add to that the fact that it is insanely popular with kids and teens, folks who will continue to have a strong attachment to minecraft as they get older.

Minecraft makes a crazy amount of revenue at present without very much effort being put into monetization. If MS did nothing other than to offer paid high quality hosting and other basic features they'd bring in even more revenue. If they developed the game more thoroughly, came out with a sequel, more merch, etc, they'd be rolling in cash.

[+] EthanHeilman|11 years ago|reply
Regardless of what the right amount of money is, microsoft will screw this up.

Repeating the success of minecraft is nigh impossible, it was the confluence of several factors at the right place and the right time. The best that can be hoped for is good stewardship of the minecraft community and client. Unfortunately this isn't the way microsoft thinks about games or products(see halo), expect a Minecraft 2: Creepers Return, Minecraft 3: the Blockening, etc... They didn't spend 2.5 Billion to steward a community.

How long before they port it to C#?

[+] IkmoIkmo|11 years ago|reply
Instagram was obviously a strategic asset, where Mojang sits in terms of strategy I really don't know exactly. Microsoft and games has always been there, but there's also been recent talk of divesting the games branch. I think one thing is clear which is that Mojang doesn't seem to be a games house that has a reputation of producing consistently successful titles, rather it seems like one indie project blew up and a team was built around that to support and iterate on one single concept. So it really seems clear that they're buying minecraft which is a game that is exceptionally lucrative financially. In the past 24 hours it sold $0.3m which gives an annual run rate of $100m+ for just the game. But perhaps more importantly, it gets huge traction with people of all ages, including kids, and both genders. It's really a cross-over product that sits extremely well with parents. The Raspberry Pi for example is indicative of this, they're only half serious now when they say one of the key requirements is that it has to be able to run minecraft, when this thing is used by kids worldwide in and outside of classrooms. Being able to integrate that with the Microsoft brand is a big deal as you can have an entire generation grow up with positive connotations towards Microsoft, as well as a generation of parents, who know that if their kids will use computers and play games anyway, it'd be great if they'd spend it on minecraft. So I guess it's both highly profitable (though 2.5b is quite steep at 100m annual revenue) but also has strategic value in terms of branding, although I don't yet see how exactly they want to integrate it into their existing games branch.
[+] lquist|11 years ago|reply
The Microsoft press release says, "Microsoft expects the acquisition to be break-even in FY15 on a GAAP basis", which means that on a P/E basis, they are valuing $1 of Mojang profit at $1 of Microsoft profit. It's a game studio with 1 hit, so I'd probably only pay half that, but it's within an order of magnitude of what I'd pay.
[+] logn|11 years ago|reply
... And 1.25 LA Clippers.

> Microsoft - Mojang deal will do more to get people into (games) programming than a million $ adspend by codecademy would

Definitely. And it will get more developers into the MS ecosystem than any Microsoft Certification tests would.

[+] prawn|11 years ago|reply
Good buy IMO. Will help drive VR on Xbox and make MS' bet in that space relevant.
[+] serve_yay|11 years ago|reply
It's worth noting that the price Instagram sold for was widely considered insane at the time. Now, it's not such a big price, and seems to have been a smart buy.
[+] jacoblyles|11 years ago|reply
Whether or not a tech company is a good investment seldom depends on valuation, and I suspect it will be the same for Mojangosoft
[+] schnevets|11 years ago|reply
I'm looking at this as 0.5 Marvels
[+] scrollaway|11 years ago|reply
There goes all hope of Minecraft being released as open source.

There was a blog post from several years ago from Notch saying that after he made enough money with the game, he would "probably clean it up and release it as open source". Oh well.

Instead now we have the DMCA-infighting and an atrocious modding community that hosts their binaries on shady file upload sites, their "project page" in a forum thread, make their measly money from adfly-like sites and have never heard of Github.

So much wasted potential. Anyhow, congratulations Microsoft.

[+] spain|11 years ago|reply
To be honest, despite what Notch said several years ago I don't think it was ever well on its way to being open-sourced. Any hope that he would "clean it up" vanished when he lost interest in taking active part in development and passed it on. Not to mention that they've been working on a public modding API for years that never took off.

> Instead now we have the DMCA-infighting and an atrocious modding community that hosts their source code on shady file upload sites, make their measly money from adfly-like sites and have never heard of Github.

Couldn't agree more, but it's more of a consequence of most modders being new and inexperienced developers and kids. Some of the bigger and more professional modding projects like Bukkit are already hosted on GitHub [0], so I wouldn't blame it on just being closed source. It's not guaranteed that it would be that much better, though it might be because that way a lot more existing developers might feel like contributing.

[0] https://github.com/Bukkit/Bukkit

[+] LandoCalrissian|11 years ago|reply
Yeah it's kind of sad. I really felt that when it went open source we would have seen a huge new explosion in creativity with the game that would have given it legs for years to come.

I really don't mind that Notch sold out. I do mind that he says that this wasn't about money. It sounds more like he is trying to convince himself of that more than anyone else.

If it really wasn't about money why not just open source it and walk away? Or just give it to the employees of Mojang? He already has over 100+ million, so he's certainly not worried about food.

More power to him for making an insane amount of money, because he certainly deserves it, but don't bullshit me about your motivations.

[+] clarry|11 years ago|reply
Does anyone else feel at least a little betrayed?

I bought Minecraft quite early, back when it wasn't such a big hit. Normally I do not buy games. But I'm all for free & open source games, and back then what the site said read or at least felt like a personal promise to eventually release the code. That is why I bought Minecraft. The game looked interesting, and I wanted to contribute to (eventual) open source gaming. I wouldn't have paid for it otherwise... and no, I don't actually play Minecraft.

[+] Mikeb85|11 years ago|reply
It doesn't need to be open source. Minetest (an Irrlicht C++ clone) is open-source, as is Infiniminer. Also, Voxel.js. All the relevent code is available for future learning...
[+] avian|11 years ago|reply
> Instead now we have the DMCA-infighting and an atrocious modding community that hosts their source code on shady file upload sites, make their measly money from adfly-like sites and have never heard of Github.

I'm not sure what you said is (solely) the result of Mincraft being closed source. As far as I know, Android is released as open source, but most of what you said also applies to that modding community.

[+] JetSpiegel|11 years ago|reply
Infiniminer still exists, I bet Zach wouldn't mind that good PR.
[+] MartinCron|11 years ago|reply
There goes all hope of Minecraft being released as open source.

Microsoft has been releasing more and more of their software platform as open source. It's not outside the realm of possibility that some bits of Minecraft would be open sourced.

[+] ericcholis|11 years ago|reply
The .NET Compiler Platform and parts of the .NET Source being open sourced will hopefully tell a different story.
[+] bpodgursky|11 years ago|reply
Like others have said I think open sourcing was always unlikely. But I think a real clean mod api is a real possibility now.
[+] rcamera|11 years ago|reply
I have been trying to understand why Microsoft would buy Minecraft. Even though Minecraft is really important, and wildly successful, but the price tag for a game studio with one successful game is rather odd, considering it is unlikely Minecraft will sell millions of copies more (it is already the most sold game ever made). This is a long shot, but it may explain it:

If Microsoft is trying to build its own Steam competitor (which given Valve's current strategy to make Linux an alternative gaming platform to Windows, makes sense), then Minecraft is the perfect acquisition to start it up, for a number of reasons. It is the best selling video game of all time, with over 15 million copies sold for the PC (54 million copies across all platforms), and it has over 100 million accounts registered. It is possibly the only successful indie game that has never integrated with Steam, and that has a very young userbase (based on my experience) which, given their ages, probably isn't part of Steam's userbase. All of these aspects make it a great strategic acquisition if Microsoft wants to make a new and successful game marketplace and platform for Windows.

Anyone else has any other idea why the 2.5 billion price tag?

[+] mattdotc|11 years ago|reply
Very peculiar seeing this news after Notch was so critical of the OculusVR sale to Facebook.

Seeing as I bought my premium Minecraft account on 8/1/2010, I must be due some sort of equity for supporting him at such an early stage.

edit: Oh, and what do you think will become of the old alpha/beta/release builds? I'm thinking about going ahead and archiving them all in case access to them is revoked. Not sure if I'm being too paranoid, but I much preferred the simpler versions without all the distractions like XP, hunger, and those weird tall black guys.

[+] TillE|11 years ago|reply
> He’s decided that he doesn’t want the responsibility of owning a company of such global significance

> The founders: Notch, Carl, and Jakob are leaving

Yeah, that's exactly what I suspected when the rumors started. Markus doesn't really want to run a company, so he's cashing out and doing his own thing. Good on him.

[+] norswap|11 years ago|reply
What I wonder is what Carl and Jeb are going to do though. Do those three have another collective project? Or is it all sunny beaches and martinis? Or a Carl/Jeb project while Notch tinkers away?
[+] cptskippy|11 years ago|reply
I could see this being a huge play for young developers by Microsoft. They have been positioning themselves as a platform agnostic services provider, investing in or purchasing cross platform development frameworks, and opensourcing a lot of their technologies (e.g. C#, .NET, Rosetta, OWIN). Now all they need are developers to adopt their technologies.

Minecraft has a huge modding community and a lot of first time coders are getting into the scene because they love Minecraft. Imagine Microsoft ports Minecraft to C# or possibly C while maintaining full support for all existing platforms. Then go about developing a great API/SDK for modders and making it incredibly easy for anyone to download Visual Studio and the Minecraft SDK.

They just introduced an entire generation of developers to MS technology.

[+] joemaller1|11 years ago|reply
I'm trying, but I just don't see any good coming of this. The comments from Mojang seem incredibly naive, everything is going to change.

First people to make money on this will be lawyers. There's going to be a blizzard of copyright takedown notices going out to every unlicensed (most all) Minecraft merchandise and spinoffs. The offline fan ecosystem is going to get slaughtered.

Mostly I'm just sad for all the kids. They love Minecraft, and this won't end well.

[+] danschuller|11 years ago|reply
I think this just demonstrates the power of the internet/social networks and an increasingly interconnected world.

Notch creates a small game on his own, improving on Infiniminer, it catches the imagination of an entire generation. Without the internet and social networks this would have never happened. Without this game having a multiplayer mode added (which happened fairly early on) it wouldn't have happened. I wonder what it would be like it Doom was first released into a similar environment but maybe it's a little less universal.

People in their bedrooms recording themselves playing video games speak as loudly, or more loudly than traditional media. PewDiePie has 30 million subscribers - he can make any game just with a mention.

It's interesting now our networks are concentrating and distributing influence, power and wealth. Nothing I could have predicted and I'll enjoy seeing what comes next.

[+] DanBC|11 years ago|reply
Be interesting to see how MS deal with YouTubers.

Shutting down Etho, Yogscast, etc is likely to lead to hordes of 13 year olds hating MS for ever.

Maybe there'll be an MVP programme for YouTubers? </s>

I just hope MS can sort out modding: a sane mod interface would make many people very happy.

[+] malloreon|11 years ago|reply
That Mojang is worth 62.5% of Star Wars is a testament both to Minecraft's value and how much Lucas destroyed Star Wars in the last 20 years.
[+] worklogin|11 years ago|reply
> There’s no reason for the development, sales, and support of the PC/Mac, Xbox 360, Xbox One, PS3, PS4, Vita, iOS, and Android versions of Minecraft to stop. Of course, Microsoft can’t make decisions for other companies or predict the choices that they might make in the future.

Linux is absent, but I wonder if they lump that in with "PC".

[+] diltonm|11 years ago|reply
I'd feel much better if they would clarify the term PC. As a long time Linux user and Minecraft fan; I'd hope the Linux client continues to thrive similar to the way the Skype client has after the Microsoft acquisition. The fact that the list uses the term PC instead of spelling out "Windows,Linux,etc." worries me some.
[+] Joona|11 years ago|reply
Holy crap, 2.5 BILLION? And on top of that Notch and Jakob (and Carl) are leaving? I understand Notch's decision (as he has been doing his own thing), but I did not imagine Jakob or Carl leaving.
[+] calewis|11 years ago|reply
Seems to me like the most sensible tech purchase in a while, PE ratio is a bit more normal and it has massive and sustained traction amongst young people. It remains to be seem if M$FT will fuck it up, but that's a different question.
[+] tdicola|11 years ago|reply
The thing I can't wait to see is how Microsoft intends to recoup the cost in FY2015 like they say they will. From what I read Mojang only made ~$300 million off Minecraft last year, so where is the other $2.2 billion going to come from in the next 9 months? I will be surprised if there isn't a big write-down on this purchase come July.
[+] DigitalSea|11 years ago|reply
Worse kept secret ever.Good for Notch and everyone else though, a well-deserved cash out and completely understandable. Notch never striked me as a guy who wanted to run a big company like Mojang in the first place.
[+] tyho|11 years ago|reply
>What about the other editions of Minecraft? Will they stop being developed?

>There’s no reason for the development, sales, and support of the PC/Mac, Xbox 360, Xbox One, PS3, PS4, Vita, iOS, and Android versions of Minecraft to stop.

So what is happening to the Linux edition that has been fully supported since day 1?

[+] outside1234|11 years ago|reply
One of the things you need to understand about these deals, and deals like it (Nokia), is that Microsoft is using trapped overseas cash to make these acquisitions.

(If they repatriated this cash to the US instead they would lose something like 40% of it to taxes)

Its a good time to be a foreign (to the US) company.

[+] shmerl|11 years ago|reply
TL;DR: We don't know Microsoft's plans. But don't worry, everything will be fine.

Yeah, right. It's MS we are talking about. MS don't even hide their mindset here:

http://www.microsoft.com/en-us/news/press/2014/sept14/09-15n...

> Minecraft fans are loyal, with nearly 90 percent of paid customers on the PC having signed in within the past 12 months.

That's MS for you. DRM to be expected.