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(Update: it's official!) Microsoft to buy Minecraft-maker Mojang

Mojang, the Swedish company that produces the hit game Minecraft, is reportedly in acquisition talks with Microsoft. What could the $2 billion strategy be?
September 15, 2014
Minecraft pig and Xbox

Update: In a blog post on Xbox Wire, Microsoft just confirmed it will acquire Mojang. Minecraft will continue to be available on all platforms, including Android. Mojang confirmed the rumored acquisition price of $2.5 billion. Markus “Notch” Persson, Carl Manneh, and Jakbok Porser, the three founders of Mojang are leaving the company.

Original post:

Mojang, the creator of popular sandbox game that has crossed console, desktop and mobile platforms, is reportedly in talks with Microsoft for a possible acquisition. According to sources cited by the Wall Street Journal, the Redmond software and cloud services giant is making an offer to acquire the Stockholm-based independent game producer to the tune of US$ 2 billion.

This planned acquisition will be the first big-ticket purchase by Microsoft after Satya Nadella took over as CEO. This is also the first major acquisition after the firm started to refocus its corporate strategy toward a cloud-services oriented firm.

To date, Mojang has largely been independent, with three co-founders Markus “Notch” Persson, Carl Manneh and Jakob Porsér, being its only board members and share-holders. The company has previously rebuffed any outside investment or acquisition offer, preferring instead to rely on revenues and focus on its own development lifecycle. In fact, Persson has been outspoken against the intervention of big technology corporations in startup companies like his own.

“Mojang exists because I got lucky with ‘Minecraft,’ and it got way bigger than I could handle on my own,” Persson wrote in June this year. As for potential investments and acquisitions, he said these were tempting, but “at the end of the day we choose to do what either makes the most sense for our products or the things that seem like fun for us at Mojang.”

Neither Microsoft nor Mojang would confirm the acquisition talks, although such an arrangement will help bolster Microsoft’s own position in the gaming industry, particularly with a title as popular as Minecraft. Mojang chose to launch the console version of Minecraft on Xbox in 2012, well ahead of the platform’s arch-rival in the business, Sony Playstation. The Xbox and platform has accounted for about a third of Mojang’s revenue from its game sales in the previous year. Mojang has recently launched Minecraft for Xbox One, as well. It can be noted that unlike many free-to-play games that are popular of late, Minecraft is an outright purchase — $7 for the smartphone and tablet versions, $27 for console and $20 for PC.

Interestingly enough, Mojang has actively avoided porting the game for Windows Phone, because it deemed the platform not sizeable enough to warrant its own release. With an acquisition, Windows Phone and Windows 8.1 tablet users might have hopes for a Minecraft release soon — or perhaps bigger projects in the future.

The question now is what kind of changes will take place if and once Mojang is, indeed, acquired by Microsoft. Being independent, the team has prided itself in not having any outside pressure from owners or investors in shipping products and building for different platforms. “Financially speaking, we have no pressure whatsoever to rush into any new projects,” said CEO Manneh earlier this year.

According to sources, however, it was Persson himself who opened up the possibility of an acquisition, having approached Microsoft a few months ago. With a positive working relationship with Microsoft for the Xbox, parties have worked on a framework and a tentative acquisition price. “Notch” is not likely to remain after the acquisition, although he will reportedly help out with the transition.

Will an acquisition mean a focus on Microsoft-owned platforms? Or will developers start working on other Microsoft projects, as well, where a sandbox-type 3D environment will come into play? Sources cited by Bloomberg say that Microsoft will most likely maintain versions of the game for competing platforms, in line with its strategy to produce high-quality versions of its productivity applications for both its own operating systems like Windows, as well as competitors’.