Microsoft & Minecraft

All the kids around me are sitting in front of their computers and playing games, and I don`t know what`s so funny with the game. I asked them yesterday, because you can`t win something and you are not competing with someone. So, why is it so funny?

The kids love the game and they play Minecraft. A free-to-build sandbox game, which is developed by the Swedish independent video game developer Mojang AB. The company is founded in May 2009 by Markus Persson in Stockholm.

Markus Persson founded Mojang alongside his best friend Jakob Persèr, with Carl Manneh later brought in as a CEO. Whithin a year, the company grew to a size of twelve employees. In 2011, the founder of Napster and former Facebook president Sean Parker offered to invest in Mojang, but was declined. A year later, Mojang had accumulated revenues of over $80 million.

On September 15, 2014, Microsoft announced a deal to acquire Mojang for $2,5 billion in a deal to be made official by the end of the year. With the stakes in the company bought out, the three founders will leave the company.

Is that a problem?

Probably, because in my point of view, the «assets» is gone. I`m in doubt about Microsoft’s skills to take Minecraft to the next level. Do they have the right expertise to do that? I hope so, because if Microsoft do the right things, I think Mincraft can be the new virtual kind of the popular Danish plastic-bric-company; LEGO.

The private company LEGO is valued at $14,7 billion and they have great success. You can only imagine how the opportunities are for Microsoft? Really big I think. Minecraft has sold over 54 million copies across all platforms.

Microsoft’s new CEO Satya Nadella has made his first major acquisition since taking over the leadership after Steve Ballmer. Microsoft has been known to make some expensive acquisitions under Steve Ballmer, and many companies were later sold at a loss or absorbed into the company without unlocking new value.

I think Microsoft can boost sales of both Xbox and Minecraft. Microsoft will create new editions of the game and set up a film and merchandising franchise, but I see a little bit trouble in the long run because of the lack of the founder Persson.

Minecraft has been around for over four years now, and longevity and consistency in this business isn`t normally part of the equation. Games tend to be trendy, but Minecraft seems to be one of the few exceptions to this rule, and that`s probably why Microsoft see the potential in this game.

Back to our Danish friends in LEGO. Think about it. LEGO is still hot for the kids, and have been on the market since 1932! Can you belive that? A family-owned company based in Billund, Denmark, which is the world`s largest toy manufacturer, surpassing Mattel, previously holding that position.

The word LEGO is derived from the Danish words «leg godt», meaning «play well». The word «lego» also means «I gather together» in Latin, and «I connect» or «I tie» in Italian. LEGO`s revenue in 2013 was $4,7 billion, while Mojang generated only $326 million the same year. That`s nothing compared to Microsoft’s $23 billion in the last quarter, so it would do little to move Microsoft’s share price, adding about $75 million a quarter to the top line and about $30 million to the bottom line.

But look at the iconic brand; LEGO. They have more than plastic lego bricks. They have grown to include factories throughout the world and have 11,755 employees (2013). In addition, they have built four amusement parks around the world, known as «Legoland».

Each park features large-scale Lego models of famous landmarks and miniature Lego models of famous cities. Legoland was first built in Lego`s home town Billund in Denmark. This was followed by Legoland Windsor in England, Legoland California in Carlsbad, US and Legoland Deutschland in Gunzburg, Gemany.

In addition, they opened Legoland in Winter Haven in Florida, and Nusajaya, Johor, Malaysia. Now, they are planning to open a new Lego hotel in Asia. Merlin Entertainment is also planning to open several parks in Legoland Dubailand, Legoland Nagoya, and Legoland Korea. They have also opened four new Legoland Discovery Centres, which take the Legoland concept and scale it down to suit a retail park environment.

You can imagine what opportunities Microsoft have with this game, but do they have the culture to expand the brand?

 

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