Microsoft Nearing a $2 Billion Deal to Buy Cash Cow Minecraft

The acquisition of Minecraft maker Mojang would be Microsoft’s biggest deals since Satya Nadella took over as chief executive from predecessor Steve Ballmer, in February this year.

The acquisition of Minecraft maker Mojang would be Microsoft’s biggest deals since Satya Nadella took over as chief executive from predecessor Steve Ballmer, in February this year.

World’s biggest software company Microsoft Corp., maker of Xbox console is nearing a deal worth 2 billion dollars to acquire Mojang, maker of popular game Minecraft, revealed anonymous sources familiar with the discussion. The deal is expected to reach to an agreement this week, although it is more likely that it may prolong to next week, sources revealed.

Minecraft tasted instant success with the market since its launch in 2009. The earlier version of the game entailed building an environment that helped push virtual world second life into mainstream.

“It’s one of the greatest success stories in gaming over the last 10 years,” said Doug Creutz, an analyst at Cowen & Co. in New York. “They’ve sold a lot of copies of Minecraft over the Xbox.”

The multi-award winning game has been widely praised for the creative freedom it grants its players. It has sold more than 54 million copies across a wide range of platforms such as Microsoft’s Windows and Xbox 360, Apple’s Mac, Sony’s PlayStation 3 as well as mobile platforms such as Apple’s iOS and Google’s Android.

The acquisition would be Microsoft’s biggest deals since Satya Nadella took over as chief executive from predecessor Steve Ballmer, in February. Until now, Nadella had been more focused on enhancing the company’s Internet-based services and cloud computing, which was expected from the iconic phrase “Mobile first, cloud first”. Under the new leadership, Microsoft has also reestablished a push to allure serious gamers to Xbox, after a dreary endeavor to transform the machine into a device to serve up more extensive content including movies and music. Nadella views video games as a means to expand its mainstay in PCS and mobile phones. In a letter addressed to Microsoft 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’.

In the event that both the companies reach to an arrangement, Microsoft plans to pay for the deal with cash held overseas, an individual acquainted with the matter said. It would also turn out to be favorable in terms of tax assessment outcomes for Microsoft, who has a massive majority of cash and short-term investments kept outside of the U.S.

Microsoft reached out to Mojang founder Markus Persson a couple of months ago, taking into account the constructive working relationship of Xbox-Minecraft into a potential deal, said an individual familiar with the matter.

Microsoft would keep Minecraft going on rival platforms

The two companies initially worked on the framework and estimated value of the deal and have been working out the details since. Persson is said to assist with the transition, however, it is much unlikely be more than that, sources said. Persson expects Minecraft sales to increase by reaching out to Microsoft’s video games and PC users, and by extending licensing for products such as toys and movies.

Persson founded Mojang in 2010, after he coded Minecraft on a lark in 2009 as a side venture after coming home from work at King.com, a U.K-based gaming site. Initially Minecraft was available only on Persson’s website for 15 Euros. By April 2011, Minecraft had assumed its own position in the world of pop culture by being a virtual equivalent of Lego, and has sold more than 1.75 million copies worldwide. Minecraft was the No. 2 top rated game by the number of physical retail copies sold in July for the Playstation 3 and Xbox 360, behind Sony Corp’s. The Last of Us for Playstation consoles, as per research firm NPD Group Inc.

On completion of the acquisition, Minecraft will be available for rival products as well. Microsoft believes that such products, such as its Office productivity suite, should be available across all platforms including those of rivals to extend its foothold over the market, said sources familiar with the company’s plans.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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