Coverage: Microsoft looking to buy Minecraft

Sometimes gamers aren’t looking for the latest weapon or imagery.  And that’s the case with those who play Minecraft, a popular game that uses Lego-like graphics. The game has captured the imagination of countless users – something Microsoft is willing to pay big money to acquire.

The New York Times had the details of the potential purchase in this story by Nick Wingfield and Michael J. de la Merced:

Microsoft is in advanced talks to acquire the maker of the game Minecraft for more than $2 billion, people briefed on the discussions said on Tuesday. The move was intended to ensure that one of the most popular games was available for the computing giant’s family of devices.

The sides still need to work out many details, and a deal could fall through, according to one of these people, who spoke on condition of anonymity.

Acquiring Minecraft would give Microsoft control of an online world that has defied many of the conventions of the modern games business to become a blockbuster success.

Evelyn M. Rusli, Shira Ovide, Sven Grundberg and Joann S. Lublin wrote for The Wall Street Journal that a sale would be a huge shift for the company:

The deal would be valued at more than $2 billion and could be signed as early as this week, the person said. A Microsoft spokesman declined comment, as did Mojang Chief Executive Carl Manneh.

A sale would be a surprising turn for closely held Mojang, whose 35-year-old founder, Markus Persson, has shunned outside investment and is revered in the videogame community for railing publicly against big firms, including Microsoft.

Meanwhile, “Minecraft” could reinvigorate Microsoft’s 13-year-old Xbox videogame business by giving it a cult hit with a legion of young fans. Mojang has sold over 50 million copies of “Minecraft” since it was initially released in 2009 and earned more than $100 million in profit last year from the game and merchandise. The game is already available on Xbox, as well as on Sony Corp.’s PlayStation, PCs and smartphones.

The popularity of “Minecraft” rests in large part on its open-ended possibilities, letting players build just about anything in a blocky, Lego-style world filled with dangers such as zombies and giant spiders. The game has struck a chord with children and hard-core gamers alike despite pixilated graphics that are a far cry from polished, action-based blockbusters like Microsoft’s own “Halo” franchise.

The CNET story by Daniel Terdiman had this background about the company and its profitability:

First launched in 2009, Minecraft became an instant hit, giving people a simple version of the kind of building environment that helped propel the virtual world Second Life into the mainstream. Minecraft has been highly profitable, as well, earning $128 million in profit in 2013, according to CNET sister site Gamespot.

Minecraft’s building blocks style is reminiscent of Lego, and indeed, the toy giant has partnered with Mojang on multiple tie-in sets, bringing the game from the digital into the physical. Mojang has also struck deals with Scholastic on books, and with Warner Bros. Pictures for a forthcoming movie, according to the Journal.

For Microsoft, the deal would be the first worth 10 figures under new CEO Satya Nadella. “It would also be somewhat of an unexpected plunge for Mr. Nadella, who has signaled Xbox isn’t a core business for Microsoft,” the Journal reported. “At the same time, Mr. Nadella has said Microsoft views video games as a way to expand the company’s footholds in PCs and mobile phones. In a letter to employees in July, Mr. Nadella called gaming the ‘single biggest digital life category, measured in both time and money spent, in a mobile-first world.'”

Dina Bass and Alex Sherman wrote for Bloomberg Businessweek that the deal talks began when Mojang’s founder reached out to Microsoft:

If a deal is reached, Microsoft plans to pay for an acquisition with cash held overseas, one person familiar with the company said. That would have favorable tax consequences for the software maker, whose vast majority of cash and short-term investments are kept outside the U.S.

The deal came together after Mojang founder Markus Persson reached out to Microsoft a few months ago, based on a positive working relationship on Minecraft for Xbox, said the person familiar with Microsoft.

The two companies quickly agreed on a framework and approximate price and have been working out the details since, the person said. Persson will help out with the transition, though he is unlikely to remain beyond that, according to the person.

Xbox chief Phil Spencer has a close relationship with Persson, and has flown out to have dinners with the Mojang founder, another person familiar with Microsoft said.

The software maker calculates it can boost Minecraft sales by expanding the number of game users through Microsoft’s position in video games and computers, and by expanding licensing for things like toys and movies, said one of the people.

While the game was coded as a side project, it will likely take a leading role for Microsoft. It is locking in access to content for users of its platforms and because the deal is overseas, Microsoft can use some of its non-U.S. cash to pay for it. A $2 billion payday isn’t too shabby for a side project.