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Microsoft Looks Past Windows with $2.5 Billion Deal To Acquire Minecraft Developer

Microsoft has pulled the trigger on a $2.5 billion deal to acquire Mojang, the developer of the popular Minecraft game. Rumors that a deal was in the works surfaced last week, though the price tag was initially said to be $2 billion. It looks like the founders of the 5-year-old startup squeezed another half-billion dollars out of Microsoft over the weekend.

Minecraft is the largest selling game on Microsoft's popular Xbox platform. At first glance, this move could be a play to make it exclusive to Microsoft's gaming system to keep it out of the hands of the likes of Sony. It could even signal to boost its declining Windows Phone business or even its Windows PC and tablet software. However if you listen to Xbox Head Phil Spencer and Microsoft's push to support all device platforms, that doesn't appear to be the plan.

"This is a game that has found its audience on touch devices, on phones, on iPads, on console and obviously its true home on PC. Whether you're playing on an Xbox, whether you're playing on a PlayStation, an Android or iOS device, our goal is to continue to evolve with and innovate with Minecraft across all those platforms," Spencer said in a prerecorded announcement on his blog.

If you consider CEO Satya Nadella's proclamation in July that Microsoft is the "productivity and platforms company" and it spent more than double what it cost to acquire enterprise social media company Yammer on Mojang, it may have you wondering how this fits into that focus. In the press release announcing the deal, Nadella stated: "Minecraft is more than a great game franchise -- it is an open world platform, driven by a vibrant community we care deeply about, and rich with new opportunities for that community and for Microsoft."

That could at least hint that the thinking is the platform and community the founders of Mojang created could play a role in UI design that doesn't rely on Windows or even Xbox. Others have speculated that this is a move to make Microsoft's gaming business ripe for a spinoff or sale, something investors want but a move the Nadella has indicated is not looking to make.

"The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming," Nadella said in his lengthy July 10 memo, announcing the company's focus moving forward. "We also benefit from many technologies flowing from our gaming efforts into our productivity efforts --core graphics and NUI in Windows, speech recognition in Skype, camera technology in Kinect for Windows, Azure cloud enhancements for GPU simulation and many more. Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft."

The deal also makes sense from another perspective: Minecraft is hugely popular, especially with younger people -- a demographic that is critical to the success in any productivity tool or platform. Clearly Nadella is telling the market and especially critics that it's not game over for Microsoft.

Posted by Jeffrey Schwartz on 09/15/2014 at 12:24 PM


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