In making a $2.5 billion bet on wildly popular game "Minecraft," Internet giant Microsoft is signaling an intention to aggressively compete with Apple and Google for a youth-orientated mobile market it has long sought, but to date never captured.
Analysts say the purchase of Mojang, the 40-person Swedish-based outfit behind the phenomenon, is aimed at increasing Microsoft's reach among a demographic that could be key to the company’s future growth.
Although available on Microsoft's Xbox, the game was not carried by the company’s Windows mobile — a fact in itself that may have driven Monday’s decision to buy Mojang. Analysts said it is significant that Windows mobile will be able to offer a game played by millions of people, but it remains to be seen whether it will improve Microsoft's tiny share of the mobile market.
"Minecraft" can be run across nearly all platforms and has already saturated the market, which means few options for growth, said Mike Hickey, a technology analyst at financial research institution The Benchmark Co. The game is already available on nearly everything, except for the PlayStation Vita, the Wii U — and Windows mobile.
Microsoft's late foray into mobile technology is still hampering the company's ability to break into the mobile market, of which it now controls less than 3 percent. The Windows Phone 7 was launched in 2010, three years after Apple's first iPhone in 2007 and two years after Google unveiled the Android in 2008. The company is hoping that making "Minecraft" — which had been downloaded more than 21 million times on iOS and Android as of April 2014, according to lead developer Jens Bergensten — available on its smartphones will draw young Americans who would then stay with the brand.
At its core, "Minecraft," in which users create worlds out of building blocks, is a game built on community. Kids write down server IP addresses in each other's yearbooks to stay in touch and play over the summer. "Minecraft" is like the digital offspring of Lego, with none of the mess.
Eric Klopfer, director of the education arcade at MIT, said in an email interview that "the main reason Microsoft acquired Mojang was to get 'Minecraft' onto their mobile platforms. So clearly that is a top priority." He added that "while [Microsoft] would like the 'Minecraft' product, they would really like the 'Minecraft' generation. With the relative success of the Xbox with a similar demographic, they may have the expertise to maintain that community."
Microsoft is "probably taking a long view, there are lot of kids that are playing this game," said John Taylor, a video game industry analyst with Arcadia Investment Corp. Taylor said Windows mobile still has some way to go when it comes to developing an attractive platform, but that offering "Minecraft" may well draw more of the young audience Microsoft is looking to develop as its mobile user base.
However, technology analyst Mike Hickey of the Benchmark Co. called the development only "an incremental positive" in Microsoft's struggle to attract young technology-savvy people.
The deal is Microsoft’s first big purchase under new CEO Satya Nadella, who took the helm in February earlier this year.
At annual video game conference E3 this past June, the Microsoft Xbox press conference was all about games rather than hardware updates, reflecting Nadella's pledge to make Microsoft a company that primarily sells software and Microsoft's move toward building their games business overall.
Klopfer also suggested that one of Microsoft’s aims could simply be an acquisition of Mojang’s talent. "It may be that they would like to have some of the innovation and creativity that Mojang has developed [to] influence thinking at Microsoft."
There's also a lot to be said for the creative capital Microsoft has acquired in buying Mojang. Ben Kuchera, Polygon’s opinion editor, said on Twitter, "I don't think any company has had a more positive influence on modern gaming than Mojang."
"Minecraft" spawned thousands of "Let’s Play" YouTube videos (recordings of people played), and its impressive digital cities created to resemble fictional locations like Westeros in "Game of Thrones" make it a strange bedfellow for the rest of Microsoft's often dry portfolio.
There may be hope that Microsoft can siphon some of that creative juice to reinvent a stumbling mobile strategy — and also revitalize the view that Microsoft can, in fact, compete with Apple and Google.
However, the game’s creator, Markus "Notch" Persson, and Mojang’s other two co-founders announced on Monday shortly after the deal was made public that they are leaving to work on new projects.
And fans of the game are wary of a deal that they feel risks betraying the ingenuity and creativity of "Minecraft" all with the sole apparent aim of beefing up Microsoft's mobile presence.
One user wrote on a gaming forum, "A 2.5 billion gamble on mobile … whether it pays off is all gonna come down to one sentence: 'But my phone plays 'Minecraft' already.'"