Windows Minecraft Sale

[TallManNY]

If the rumors are true that McSft is buying Minecraft for $2 billion, then I think that is another sign of desperation by McSft. The rumors are that founder Notch is only going to help on the transition and soon after that he just takes his money and walks away (presumably restricted by some sort of long term non-compete).

Still, this is even worse than Apple's Beats acquisition. This is tremendously popular video game. But it is one that folks outgrown and also it is based on very old technology that is fairly easily duplicated. How many years will it take to earn back and a return on $2 billion? I just don't see it happening unless Minecraft is VERY relevant ten years from now. A 15 year run for a video game would be unprecedented.

 

[jeremysteele]

A 15 year run for a video game would be unprecedented.

For the most part true - but quite few games are getting up there. A few examples:

WoW was released in 2004. Its at 10 years.

Eve Online was released in 2003, 11 years.

You could also argue starcraft has been going strong for over 15 years. The original is still quite popular.

Heck even Halo/halo 2 and Half-Life 2 are still going strong, and most likely will be for a few more years.


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As far as the sale goes - gaming is one of the few areas Microsoft has excelled at for years and years. I would call it a strategic move more than anything else.

 

[TallManNY]

For the most part true - but quite few games are getting up there. A few examples:

WoW was released in 2004. Its at 10 years.

Eve Online was released in 2003, 11 years.

You could also argue starcraft has been going strong for over 15 years. The original is still quite popular.

Heck even Halo/halo 2 and Half-Life 2 are still going strong, and most likely will be for a few more years.


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As far as the sale goes - gaming is one of the few areas Microsoft has excelled at for years and years. I would call it a strategic move more than anything else.

Good examples. But I think only WoW continues to make the high revenue that this investment needs to justify it. And Wow has required continued full scale development and support. The amazing thing about mine craft that has made it so popular is that it has required only minimal updating. I read the company has 35 employees. The big franchises like Halo and COD have required even more continued development expenses.

But yes very strategic. Mine craft is crazy popular with young kids. But I think most outgrow it by the time they are 12 or so.

 

[Solomani]

Pixelated Lego-like building blocks game? Not only is it easily duplicated, there are like bazillions of copycat games already on the App Store made by low-budget developers.

But really, I can't say I'm surprised by the Microsoft acquisition. After all, this is typical Microsoft move, just like they bought out Bungie and several other "trendy" game companies during the peak of their popularity.

$2 billion is a lot of money.

 

[AxoNeuron]

Pixelated Lego-like building blocks game? Not only is it easily duplicated, there are like bazillions of copycat games already on the App Store made by low-budget developers.

But really, I can't say I'm surprised by the Microsoft acquisition. After all, this is typical Microsoft move, just like they bought out Bungie and several other "trendy" game companies during the peak of their popularity.

$2 billion is a lot of money.

Buying up "trendy" companies during the peak of their popularity...wasting billions of dollars on a company that shouldn't even be worth a third of the price they paid...

Hmmm....that reminds me of something...I can't...quite...recall...

 

[Solomani]

Buying up "trendy" companies during the peak of their popularity...wasting billions of dollars on a company that shouldn't even be worth a third of the price they paid...

Hmmm....that reminds me of something...I can't...quite...recall...

Image

Well yeah, you just stated what is already known. Everyone copies Apple. Even when Apple does dumb things like buying an overhyped trendy company, another tech giant (e.g. Microsoft) will do the same exact thing one month later.

It's like: [Microsoft] "Hey look! Apple just bought out an overpriced company for a couple billion, how dumb! OK, so how do we go about doing the exact same thing next week?"

The tech industry is weird like that.

 

[theluggage]

Of the various reasons why MS might be doing this, it is safe to assume that they don't plan on making over $2bn from selling the current version of Minecraft.


If there is a "sellin' stuff and makin' money" rationale, its more likely to do with using an XBox-exclusive "Minecraft 2" release (which will probably sell tons, even if its rubbish) to drive up XBox sales - and to prevent Sony, Apple, Facebook et. al. from doing the same.

On the other hand, "sellin' stuff and makin' money" is the strategy of last resort for a huge multinational, so maybe some analyst at Microsoft has looked into his Magic 8-Ball, checked the position of the stars, consulted the I-Ching and decided that buying a well know game brand will send auspicious signals to the market and boost the share price.

But it is one that folks outgrown and also it is based on very old technology that is fairly easily duplicated.

I wouldn't underestimate the complexity of duplicating Minecraft. First, I'm not aware of any other video game where every "1m" square block of the scenery, over an effectively boundless area and a height of -64 to 256 blocks can be altered by the user, and gets rendered in 3D. Nor do I know of any video games where the in-game physics allow you to build a working Turing machine (without 'cheating' and incorporating a programming language). Then, there's tuning all the landscape-generating algorithms to produce convincing and varied landscapes. Also, before throwing technology at it, consider that the somewhat retro, "1987 called and wants its artwork back" style actually blends nicely with the blocky landscape. I think photo-realistic characters and objects sitting on a landscape composed of 1m square blocks would just look wrong.

 

[TallManNY]

Of the various reasons why MS might be doing this, it is safe to assume that they don't plan on making over $2bn from selling the current version of Minecraft.


If there is a "sellin' stuff and makin' money" rationale, its more likely to do with using an XBox-exclusive "Minecraft 2" release (which will probably sell tons, even if its rubbish) to drive up XBox sales - and to prevent Sony, Apple, Facebook et. al. from doing the same.

On the other hand, "sellin' stuff and makin' money" is the strategy of last resort for a huge multinational, so maybe some analyst at Microsoft has looked into his Magic 8-Ball, checked the position of the stars, consulted the I-Ching and decided that buying a well know game brand will send auspicious signals to the market and boost the share price.



I wouldn't underestimate the complexity of duplicating Minecraft. First, I'm not aware of any other video game where every "1m" square block of the scenery, over an effectively boundless area and a height of -64 to 256 blocks can be altered by the user, and gets rendered in 3D. Nor do I know of any video games where the in-game physics allow you to build a working Turing machine (without 'cheating' and incorporating a programming language). Then, there's tuning all the landscape-generating algorithms to produce convincing and varied landscapes. Also, before throwing technology at it, consider that the somewhat retro, "1987 called and wants its artwork back" style actually blends nicely with the blocky landscape. I think photo-realistic characters and objects sitting on a landscape composed of 1m square blocks would just look wrong.

Just typing "craft" into the App store pulled the well reviewed Lunacraft, Minebuilder, Survivalcraft and The Blockheads. I did not purchase or download any of these, but the pictures look like Minecraft. And, more importantly, they all have plausibly real looking reviews that state the games are comparable to Minecraft. I don't know if the physics are good enough in them to build RAM or some of the other odd stuff that can be done in Minecraft. But I don't think any of the programming would be challenging for any large game shop. That is just a guess on my part. But it is based on what I see and the plethora of copycat programs.

 

[phuocsandiego]

I'm not sure it's such a desperate move though.

Consider these facts:
1. Beats is estimated to have $1 billion in revenue. Who knows what their profits are since they're private. But most estimates hover around a 15% margin which puts the Apple $3 billion purchase at a roughly 5% rate of return. Not too bad for cash just sitting there.
2. Mojang is also private but have released some details. The Wall Street Journal reported that they had $128 million in PROFITS in 2013. Who knows what their revenue was but the profit number is actually better to gauge a rate of return. Microsoft paying $1 billion for Mojang will give them about a 6.4% rate of return... again, not bad.

Fair enough to say who knows how long that will go for. But if they can milk it for 8 years, they'll make their money back plus any goodwill from the brand and any other synergies they're trying to pull off like expanding the Windows Phone app pool. It's not a bad move or is it a desperate one. Keep in mind that Microsoft is more profitable than Apple ($22 billion net income on $78 billion revenue or about 28%). Apple has more revenue ($171 billion revenue on net income of about $37 billion or about 22%). And Microsoft gets about $2 billion a year from Android in profit for doing nothing. That will only grow over time as Android gains more market share in the lower end segment (but with a much larger user base). I wouldn't cry for either company or think either are desperate. The entire history of the two companies show quite the opposite however; Apple was desperate enough to need a huge investment from Microsoft to continue as a going concern in the 90's. Microsoft has never, ever been even near that dire strait in its entire corporate life.

You just can't compareMicrosoft and Apple. They are different types of businesses... literally apples & oranges.

 

[NeilHD]

My 8 year old son is CRAZY about Minecraft. It's all he is interested in. Either playing it or watching videos about it. And all his friends are basically the same.

This is a HUGE potential market and for one reason: Merchandising.

Seriously. There's millions of 8-12 year old kids out there who want Minecraft stuff, but hardly any merchandising for it. There's some T-Shirts and a few toys and bits but nowhere near enough, and (at least in the UK) it's all mega expensive. I just went to the Toys R Us website and searched Minecraft. 28 hits under "Toys". That's it. Moshi Monsters had 123 hits, and hits in other categories too.

If MS sort out the merchandising - bedding, curtains, lunchboxes, clothing, stationary, greetings cards, decorations, sweets, drinks you name it they will make a bomb. Then there's going to be official books, novels, Minecraft: The Movie and so on.

 

[Dirtyharry50]

I wonder if this means the end of Mac support ongoing.

 

[jccamp95]

Once MS takes over Minecraft will require the following
3 reboots to install, for some reason Adobe Reader is now included, Skype installed, Default search engine changed to Bing. Once installed there will be 7 patches/updates each requiring a reboot. Every tuesday there will be a patch to fix security holes, requiring a reboot. OSX and Linus support will vanish, and you will need a 5 year subscription to XBOX Live Gold in order to play. Along with 7gb of cloud space and 600mb of HDD space for install files.

 

[Huntn]

Look at Landmark or Space Engineers. These types of games are the future of voxel building sandboxes. I imagine a lot of potential there.

 

[Soccer5se]

Don't forget the education potential of Minecraft. I teach with Minecraftedu and it's still super popular with middle school and high school kids. I don't know what MS is going to do with Minecraft, I'm just hoping that they don't release a Minecraft 2 and stop the free updates. I don't see them improving the graphics too much because Minecraft is already a system hog. If you added 3D graphics you would need a monster of a computer to play it.

 

[TallManNY]

I'm not sure it's such a desperate move though.

Consider these facts:
1. Beats is estimated to have $1 billion in revenue. Who knows what their profits are since they're private. But most estimates hover around a 15% margin which puts the Apple $3 billion purchase at a roughly 5% rate of return. Not too bad for cash just sitting there.
2. Mojang is also private but have released some details. The Wall Street Journal reported that they had $128 million in PROFITS in 2013. Who knows what their revenue was but the profit number is actually better to gauge a rate of return. Microsoft paying $1 billion for Mojang will give them about a 6.4% rate of return... again, not bad.

Fair enough to say who knows how long that will go for. But if they can milk it for 8 years, they'll make their money back plus any goodwill from the brand and any other synergies they're trying to pull off like expanding the Windows Phone app pool. It's not a bad move or is it a desperate one. Keep in mind that Microsoft is more profitable than Apple ($22 billion net income on $78 billion revenue or about 28%). Apple has more revenue ($171 billion revenue on net income of about $37 billion or about 22%). And Microsoft gets about $2 billion a year from Android in profit for doing nothing. That will only grow over time as Android gains more market share in the lower end segment (but with a much larger user base). I wouldn't cry for either company or think either are desperate. The entire history of the two companies show quite the opposite however; Apple was desperate enough to need a huge investment from Microsoft to continue as a going concern in the 90's. Microsoft has never, ever been even near that dire strait in its entire corporate life.

You just can't compareMicrosoft and Apple. They are different types of businesses... literally apples & oranges.

We shall see. I know it is a really popular game with kids. Maybe merchandise and also cross selling to the kids will the trick. Minecraft's profits were probably pretty close to its revenue since its costs with 35 employees and basically the program not being substantially changed from year to year, it shouldn't have had too much in the way of costs. So its margins might even have been as high as 50%.

I bet Beats margins are better than 15% by the way.

But lets see how Minecraft does in the near future as a revenue source. I guess every year there is a new crop of 8 year olds, so there are new customers.