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Microsoft splurges 2½ INSTAGRAMS buying Minecraft maker Mojang

It'll all end in showers of collapsing blocks, mark my words

+Comment Having closed down its own lesser gaming operations, Microsoft is spending $2.5bn on buying one with a big punch – Minecraft maker Mojang.

Loss-making Minecraft will break even in 2015, Microsoft said in a statement. The deal is expected to close late this year.

Microsoft is doing more than buying a leading and popular game title, though – it’s taking on an experienced games development team. To that end, Microsoft said Stockholm, Sweden-based Mojang would be joining its Microsoft Studios – publishers of Halo, Forza and Fable.

The deal is of new Microsoft chief executive Satya Nadella's own doing and is one of the largest in the software maker’s history. Skype remains the record-breaker in Microsoft’s entire corporate history, being worth $8.2bn, with Aquantive second on $6.3bn back in 2010.

The latter was eventually almost entirely written off; the former is a work in progress.

Microsoft was short on specifics as to “why” it’s buying Mojang, leaving that to followers and fanbois to talk of self-evident truths about “mobile first” and “cloud first.”

An obvious prize is just the raw ownership of Minecraft, the pixelated Lego-meets-Second-Life ecosystem that’s a hit with kids, teens and nerds. Denmark has even created a 1:1 scale model of itself in Minecraft.

The risk, though, is that Minecraft turns out to be just another Angry Birds, Flappy Bird or FarmVille whose popularity disappears over time. Mojang will likely be relieved that it doesn't have to sweat about what comes next once the growth of Minecraft is finished – that's Microsoft's problem now.

The challenge for Microsoft is made bigger by the fact Mojang made no money – hence Microsoft’s desire to talk up claims of break even by next year.

So what is the business and technology case for owning Mojang and Minecraft? Nadella and Co. aren’t giving specifics. Rather, Nadella trotted out the known knowns about Minecraft before gazing off misty eyed into the distance, towards a land called opportunity.

Opportunity is the same buzz-phrase that Microsoft’s then CEO Steve Ballmer used to justify buying Skype, and before that Aquantive.

To that end, Minecraft is popular: more than 14 million copies have been sold, the majority of these on Microsoft’s Xbox 360. Minecraft is the most popular video game in history, with 100 million downloads and it is the most popular online game on Xbox.

What these two data points mean is that Microsoft is taking hands-on ownership of the development of a very important application running on its platform. It’s like when Microsoft decided to buy PowerPoint because it saw this as a pivotal piece of software to help its Office suite and sell Windows.

Microsoft will no doubt have some views on new features and how Minecraft can be tied into other Microsoft platforms and properties to make money.

Other claims: Minecraft players are “loyal” (read: addicted), with 90 per cent of paid customers on the PC version signing on during the last 12 months. Cue Nadella’s hero shot: “Minecraft is more than a great game franchise – it’s an open-world platform, driven by a vibrant community we care deeply about, and rich with opportunities for that community and for Microsoft,” he said in a statement on the deal.

Microsoft has promised to continue making Minecraft available on non-iOS mobes, Android and PlayStation – all non-Windows platforms.

Buying Mojang will be a slap in the face for investors and doubters who’d been pushing for Microsoft to divest Xbox and gaming in favour of enterprise and business. It also follows Microsoft’s decision to cut back the games development track of its activities in 2009, when it closed the ACES studio for cost-cutting. ®

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As any fule no, Facebook bought Instagram for $1bn back in 2012.

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