Minecraft made its Xbox One debut last week. Now, game designer Mojang may move much closer to Xbox builder Microsoft. Source: Mojang.
Minecraft is kind of a big deal. The Lego-like video game has spawned a culture all its own. If there are children around you, or you've fired up YouTube at all in the last, oh, four or five years, you know exactly what I mean.
Now we can finally put a price tag on this cultural phenomenon. According to independent reports in Bloomberg and The Wall Street Journal, Microsoft (MSFT +1.13%) may buy Minecraft maker Mojang AB for about $2 billion.
The Journal cites one anonymous source with knowledge of the buyout talks, and Bloomberg adds another three nameless insiders. Rumors are rumors, but there's usually something serious going on when the chatter comes from several respectable news outlets.
Ever wanted to visit Denmark? The Danish government created Minecraft maps of the entire country. Here's an in-game view of scenic Moens Klint. Source: Danmarks Radio.
What's going on?
The deal could be signed as early as this week, according to all four of the original sources. However, two of them told Bloomberg that final signatures are more likely to happen next week. Either way, the talks have reportedly been going on for several months already. The Sweden-based game producer is unanimously worth "more than $2 billion" according to these reports.
Mojang is privately held with only three shareholders. Minecraft is Mojang's only real product, as other game titles have failed to go viral like this megahit did. The game has shifted over 50 million units so far, including versions for PC systems, Android and iOS smartphones, and modern gaming consoles. These buyout talks reportedly grew out of a pleasant experience with porting Minecraft to Microsoft's Xbox 360 and Xbox One systems.
If Mojang ends up under the wing of Microsoft -- or any other large company, really -- it'll be a sharp shift from earlier attitudes. Mojang was working on a Minecraft version for the Oculus Rift virtual reality system when Facebook (FB +2.21%) bought Oculus.
Mojang founder and Minecraft inventor Markus "Notch" Persson immediately ended the Oculus development effort. "Facebook is not a company of grass-roots tech enthusiasts. Facebook is not a game tech company," Notch wrote in a blog post. "Facebook has a history of caring about building user numbers, and nothing but building user numbers. People have made games for Facebook platforms before, and while it worked great for a while, they were stuck in a very unfortunate position when Facebook eventually changed the platform to better fit the social experience they were trying to build."
So that was the end of the first virtual reality version of Minecraft, all because Notch didn't trust Facebook to keep Oculus friendly to developers.
"I did not chip in ten grand to seed a first investment round to build value for a Facebook acquisition," Notch said. Emphasis his, not mine. He has always been seen as a careful brand manager rather than an opportunistic business mind. If Notch was in it for the money, he hid his ambitions very well.
The fiercely independent studio doesn't take kindly to corporate meddling which could prove problematic, even given Microsoft's deeper game industry history than Facebook's.
But of course you can buy official, Minecraft-themed Lego sets. Source: Minecraft.net.
From Stockholm to Redmond? Yeah, right.
Microsoft, of all potential buyers, seems like a rougher fit than most. Jonas Thente, who covers cultural events for Swedish newspaper Dagens Nyheter, says that "Notch and Microsoft are natural enemies in the gaming world."
"For more than a decade, Microsoft has been despised by gamers who see the company as a threat to gaming culture at best and its most ardent grave digger at worst," Thente explained. "Every attempt Microsoft has made to improve the situation has only made it worse."
Unless Mojang's management sees Minecraft's star fading fast, this deal makes no sense at all to Thente. In his view, the sale might be a sign that Minecraft sales and user engagement are fading, and that it might be high time for Notch to to cash in his chips and move on. "It's possible that Notch chooses to sell a commercially drained Minecraft to Microsoft in order to intensify further game development with Microsoft's money. Given his street cred, Notch could very well get away with it."
Microsoft could use the Minecraft brand to reinforce its Xbox gaming efforts. The game is already available across multiple platforms, so Minecraft will never be an exclusive Xbox title. But future improvements could come to Xbox first. And there's a cottage industry around licensed Minecraft merchandise, which could pay Microsoft back in a few years even if the game itself starts to stall out.
Also, the monetization geniuses at Microsoft could turn Minecraft in totally new directions. I'm thinking Hollywood movies and/or a TV series to rival Game of Thrones in popularity. Embed Minecraft-style player avatars across the Xbox gaming platform. Revamp Clippy as Minecraft Steve.
The big finish
Okay, forget the Clippy replacement. But it's clear that this cultural phenomenon has left plenty of money-making stones unturned. Microsoft would not be shy about turning all of them.
And then Notch could, arguably, start his next video gaming empire with the windfall from Microsoft's coffers. Despite the rich layers of irony in such an outcome, both sides of this deal could walk away as winners.
