Siobhan Keogh: Money in Minecraft

Minecraft has proven to be an incredibly popular game.

Is Microsoft's purchase of Minecraft company, Mojang, a ploy to win over the youth? Siobhan Keogh investigates.

The big gaming news of last week was that Microsoft has bought the company behind Minecraft, Mojang. That bit isn't shocking for anyone who follows the industry, as Microsoft has coveted the game for some time. What's shocking is what they paid for it - US$2.5 billion (NZ$3.07 billion).

To your everyman - the kind of person who'd be lucky to have $2,500 in cash lying around, let alone $2.5 billion - it's an unfathomable sum. And it's an absurd amount of money to pay for a video game, right?

Well, maybe. It's certainly a strange and risky manoeuver that's going to take a long time to pay off. But it's also a business that has expanded rapidly while keeping costs low and profit margins extremely high.

The original incarnation of Minecraft was created by one Swedish man, Markus "Notch" Persson. It quickly developed into something of a cult phenomenon, and Persson formed game development studio Mojang around it. Minecraft was a straightforward concept that hasn't gotten a whole lot more complex over time - in the game you mine for materials and use those materials to make stuff. It's mostly like digital Lego. You use your materials to build houses, villages, or recreate the entirety of A Song of Ice and Fire's King's Landing (yes, someone really did that). You don't play Minecraft for the purpose of finishing it. You play it to explore and create.

As the game was released on more platforms, Minecraft turned from a game with a cultish following into one that was enjoying true mainstream success. Nowadays, parents everywhere can attest to the popularity of Minecraft - I know kids who even read books about the game - but it's not just for kids. It is one of those rare products that has managed a near-universal appeal, regardless of demographic.

But the game's popularity alone isn't a good reason for Microsoft to buy it.

Minecraft reportedly earned $129 million in profits last year. It didn't make that kind of money purely off of game sales - Minecraft, with its old school, pixelated art style, has spawned an incredibly large merchandising beast. And Microsoft certainly has the resources to continue to grow sales both in the digital world and in the real.

A screenshot of the game Minecraft.

If the game's profit continues to grow over the next few years - which is entirely possible as long as new features, releases, and cuddly soft toy creepers are added to the mix - it will still probably take Microsoft at least a decade to earn the money back.

But it's also a strategic decision. The purchase of Minecraft demonstrates Microsoft's commitment to games and gaming, and gives the behemoth technology company a foothold in the mobile gaming space that it had previously been struggling to find. It's been a while since Microsoft owned a game property that people went nuts over - maybe even so far back as the release of the original Halo game in 2001.

It also allows Microsoft to tap into a market that isn't exactly in love with it right now - young people. How many people under the age of 30 do you know who you'd describe as 'Microsoft evangelists'? The number is likely to be lower than the Apple fans, unless you happen to know a lot of PC gamers. The rabid fascination that young people have with Minecraft could go a lot way toward changing attitudes.

Finally, Microsoft has a relationship with Mojang that has produced some pretty great things, like the Xbox 360 version of the game which sold massively and was very slick.

Through that relationship Microsoft has demonstrated that it knows what Minecraft's all about and what makes it great.

Incredibly, I think Mojang Studios is worth $2.5 billion, at least to Microsoft. It might not be worth that to anyone else, and it's one hell of an investment, but if Minecraft maintains its popularity - and Mojang makes one or two more great games - it could well pay off.

- nzherald.co.nz