Saturday, September 13, 2014

Microsoft is in Serious Talks to Acquire Minecraft Developer Mojang for $2 billion

Microsoft is reportedly buying 'Minecraft' developer Mojang for $2 billion, according to a few different sources. Redmond-based Microsoft is seeking to acquire Mojang to boost its gaming and web services, report said that the deal would be valued at more than $2 billion and could be signed as early as this week.



According to Wall street Journal, the software company is now in serious talks to potentially acquire Mojang AB, maker of the very popular game Minecraft, which has sold over 54 million copies across all platforms, making it the third biggest selling game of all time. 

So, what exactly is Microsoft buying here? Technology? By buying Mojang, Microsoft gets a vastly bigger audience to go with its formidable resources. And If this $2 billion deal goes through, the mobs, skeletons, zombies — and most importantly — Mojang's customer base of more than 50 million users, would give Microsoft access to a young, hip demographic it has struggled to attract. It's shot in the arm the software company has been looking for, it will give the software giant a huge leg up in the gaming market. Minecraft would also help Microsoft get into smartphone market where the company has struggled hard with both its homegrown Windows-powered devices  and with apps on rivals' mobile platforms.

Minecraft is a huge hit, last year it made a whopping $128 million profit from revenue of $360 million. So the company is already a money-maker, I guess this is the reason why we have a t$2 billion price tag here. The $2 billion price tag is around $37 per user, which is relatively standard for large acquisitions in today's tech space.  A good example of this is Facebook, which paid $42 per user when it acquired WhatsApp in February. If Minecraft can expand beyond gaming and Microsoft can take gentle steps to make more money directly from players or simply monetize the company's massive user base, suddenly a $2 billion price tag begins to make more strategic sense. Another important things here is Minecraft's appeal with the younger generation, Xbox has had more success in reaching kids and families but owning Minecraft could be big win for Microsoft's gaming business, giving the software company the ability to reach a much bigger and younger game-playing crowd.

Mojang is already a major prize for anyone that wants to build a gaming empire, with its major audience, sizable revenues and vibrant brand, a “hot target” for company like Microsoft. Acquiring Minecraft would give Microsoft a strong grip and control of an online world that has defied many of the conventions of the modern games business to become a blockbuster success, and will also ensure that one of the most popular games was available for the software giant’s family of devices- Windows Phone, PCs and Xbox.

For Microsoft, the main interest in this massive deal is motivated in large part by a desire to ensure that attractive content is available for some of its most important platforms. Minecraft is not currently available on Windows Phone, this is a big win and a smart move for Microsoft.

Because Mojang is a Swedish-based company, Microsoft would be able to use cash from overseas operations to finance the massive acquisition deal, a more attractive prospect than bringing the cash back to the United States where it would be subject to hefty taxes.

Image credit: NYTimes





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