7 years later: Minecraft $2.5B deal Microsoft’s most successful acquisition?

Minecraft arguably became the single best-selling game of all time with 176 million copies sold across platforms. But, the question is – Can Minecraft be considered as Microsoft’s most successful acquisition?

Back in 2014, when Microsoft acquired Mojang for a whopping sum of $2.5 billion, it raised many eyebrows! The reason was Microsoft’s history of failing to capitalize on its acquisitions.

We have seen the downfall of Nokia’s mobile phone business which Microsoft bought for $7.2 billion. Even buying Skype for $8.5 billion did not turn out the way Microsoft’s ex-CEO Steve Ballmer wanted.

So, seven years down the line, it’s the right time to take a look at whether Minecraft’s acquisition was the right decision for Microsoft, or did they make yet another mistake?

Minecraft and Its Early Revenues

In 2009, Markus ‘Notch’ Persson created Minecraft with the aim to make a 3D sandbox game where only the skills of the player would matter such as creativity, speed, and problem-solving. 

It was a rather simple game with no extra story or objective attached to it and the players decide what they want to do in the game. Later, some Minecraft servers like Kohi rolled out add-on tools like click test for players to practice their skills but the game remained as it is.

The game exited the beta phase in early 2011 and became an instant hit in the Indie games world. Minecraft sold 1 million copies within just two months of beta release. The game was able to rake in $33 million in revenue with the beta release itself.

With the revenue, Markus set up a game studio ‘Mojang’ dedicated to the development and further updates of Minecraft.

In November 2011, Mojang did a full release of the game. Minecraft’s craze spread rapidly and by February 2014, it crossed 100 million registered users.

In the same year, Microsoft announced that they will buy Minecraft for $2.5 billion which was almost 20 times the profits ($126 million) reported by Mojang in 2013.

Minecraft after the Acquisition

Minecraft touched many important milestones in terms of sales which no other game has even come close to.

Huge Sales Figures

The official sales are astonishing between 2016 – 2019. The nearest competitor for Minecraft in terms of copies sold is GTA V which has sold more than 110 million across all platforms.

Minecraft has roughly sold around 100 million copies after Microsoft’s acquisition. And that accounts for almost $1.5B in revenue alone.

Apart from these sales, Minecraft-themed products made a lot of buzz including official Minecraft World Lego sets, merchandise, and even novels.

To penetrate deeper into the populous Chinese market, Mojang released a localized edition for China called Minecraft China in 2016. The game was released across all platforms within a year. By November 2019, Minecraft China touched the 300 million users mark!

Foraying into New segments

With Minecraft, Microsoft was able to get an advantage of foraying into new segments such as ed-tech. In 2016, Minecraft: Education Edition was released which was designed specially for classroom use.

The education edition is priced at a one-time license fee of $5. In November 2017, Minecraft Education Edition reached 2 million licensed users i.e $10 million additional revenue.

Although Microsoft’s own run in the gaming industry has been great, buying Minecraft allowed Microsoft to earn revenues from its own competitors – Sony PlayStation, Nintendo etc. That’s something Microsoft could not do with Halo as it’s an Xbox exclusive game.

Reclaiming the Crown from Fortnite

With the release of Fortnite in July 2019, it seemed Minecraft would soon become just a name in video game history. It also gave Microsoft a reality check on their plans with Minecraft. 

Interestingly, with more and more gamers coming on Youtube, Minecraft video views surged rapidly. In fact, during the early years, Minecraft videos were the primary factor in making the game so popular (and that happened again!)

Such popularity made developers create more Minecraft-based tools like cps test, color code generator, modpacks, etc, making it easier for players to adapt to the game.

Aubrey Norris from Mojang tweeted “Growth in Minecraft views on YouTube has been accelerating over the past 2 months – in May views of MC content were up 8% vs the prior year. Expecting a big summer!”

As per the above Google Trends graph between Minecraft (red) and Fortnite (blue), Minecraft can be seen topping the search popularity yet again.

Entry into AR with Minecraft Earth

Gaming and Augmented Reality is a killer combination. And, industry biggies have claimed Minecraft to be the most important AR game ever.

On Minecraft’s 10th anniversary, Microsoft announced Minecraft Earth – the AR version of Minecraft. 

It is a free-to-play augmented reality game where players explore their neighbourhoods and collect mobs. With these mobs, you can create and build over real life objects! Players can even collaborate to build together.

According to Sensetower, within the first week of release, Minecraft Earth got over 1.2 million downloads alone in the United States.

Was it All Worth it?

In simple words – Absolutely, Yes!

After rescuing Minecraft from Notch, Microsoft had done a lot with Minecraft to make it into the most popular cross-platform game of all time. 

Considering all the ups and downs, Minecraft still has 112 million monthly active users with regular updates being rolled out. The latest Nether update was one of the most awaited one.

With Minecraft Earth, Microsoft is also leading in the AR gaming segment. It is expected to give a push to HoloLens as well in the coming future. Minecraft Education Edition is once again Microsoft’s enterprise approach that proved to be successful.

Events like MineCon Live and the Minecraft Festival are some of the great revenue sources of Microsoft adding more value to the Minecraft franchise.

If we consider the last seven years of Minecraft, it has been clearly a great purchase for Microsoft. And, it is not even slowing down!

The competition, on the other hand, is rising but your favorite game Minecraft is in the good hands of Microsoft.

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