That's 2.5 Instagrams, or 0.33 Nokias. What do you feel, realistic, too much, too little?
Personally I feel this makes (much) more sense than instagram, these guys have a very loyal following, a tremendously strong product and actually make money.
Congratulations to everybody on the selling side in this deal, too bad it had to be Microsoft but with amounts like that there are not too many companies on the acquiring side.
Does anyone know if this was stock / cash / a mix?
edit: this Microsoft - Mojang deal will do more to get people into (games) programming than a million $ adspend by codecademy would
edit2: right now (16:43 my time) microjang.com is still free
Wonder how long it will take before that is a registered domain.
edit: microjang.com is now no longer free.
Registrant:
Microjang Development (DR is US)
PO Box 100439
NY, NY 10163-4668
US (UNITED STATES)
It feels pretty reasonable to me, unless you think that it's a flash-in-a-pan that will decline fairly soon. If you think it's a franchise brand that will either hold steady or grow, then it's not really a huge purchase price. Mojang has profits of somewhere around $100-150m on revenues of $300-400m, so this values them at 15-25x profits, or 6-9x revenues, both of which are lower than most recent major tech purchases (e.g. Google paid something like 10-12x revenues for Nest). Heck, a 15-25 P/E ratio isn't even out-of-line for an established tech company without huge growth expectations (Intel and Microsoft both trade around 20).
The terms seem pretty generous, though, a completely clean buyout with no requirement that the principals stay for even a little bit.
All I know is that every one of my kids' friends knows about and plays Minecraft regularly. Even girls pay, though not as many. Among elementary school age kids, it's as close to universally accepted/known as you can get. We went on vacation to the beach, and my sons made friends with a boy, and they immediately started talking about Minecraft. The next thing, they are playing on the same server with each other, etc. Same with new friends in other activities like soccer.
Now we're starting to talk about mods or being able to write mods for Minecraft some day. As this young, enthusiastic population of users grows up, they will have a lot of buying power and interest in things like the customizations and programming aspects of the game.
I have 3 daughters, all grade-school age, and they play Minecraft more than I do. We talk about it over dinner and watch YouTube videos about how to build things. I've also seen them make quick friends by talking about it. My daughters have even come to know some server terminology (mostly from hearing me say it while getting their games to work).
It is also a thrill for me, as a parent, to be able to see their young imaginations manifest in a 3D space which I can explore and interact with.
Agreed. Warner Bros is already talking about a potential movie franchise for Minecraft. Merchandising seems to be going crazy too, I can't seem to turn around without seeing Minecraft posters, dolls, toys, etc. It probably has more long term financial potential than Harry Potter, even ignoring the core piece of software, and Azure could be an excellent fit with the move into providing and leasing servers to players that Minecraft has been dabbling with.
Friends had to pull together party gear from lots of independent sources for that birthday theme. I wonder if Microsoft will be unable to build a merchandising empire thanks to the trademark not being defended enough.
Is it a cash deal or a stock deal or both? The release mentions 'dollars' which makes it seem this is an all cash deal. That would be quite something, but since there is no lock-up for the founders it makes good sense that it would be just a cash deal.
I think it doesn't matter that much. Microsoft stock is notoriously stable for tech stocks, so the difference between an all cash deal and an all stock deal wouldn't be too big after, say, a year or something.
Notch also probably wasn't too pressured to make the sale, so the terms would be understandably in his favor.
If an opportunity to re-invest came along in that window then you'd miss out, microsoft stock is relatively stable but has seen both 'up', 'down' and 'neutral' years where up and down were on the order of 20 to 30%.
On top of that, cash is king, simply put: there is absolutely no uncertainty at all.
Given the option between x in cash and x in stock or a mix or stock and cash you should always go for the cash.
And something a bit less than x is probably still preferable in cash.
Let me give you a hint: if you ever are in the position to do a major exit get yourself a tax lawyer. Or you indeed might find yourself in the poorhouse after all.
> cash is king [...] there is absolutely no uncertainty at all
2009 was only 5 years ago. Money markets nearly crashed, banks went bankrupt, the Fed printed enormous amounts of money, and BTC was invented. With $2.5 billion on the table, I'd first hire a team of lawyers and accountants, and maybe some lobbyists too... then I'd let MS know how I want to receive the rest of the money.
I'm pretty sure that if it is a cash deal that he will convert to Euros to get rid of the $ exchange rate risk. If the deal contains a stock component that's a double risk.
It wouldn't surprise me though given notch hasn't had a compelling reason to sell so far (no investors, lives a modest lifestyle, it's still minting money like crazy). This appears to be a "too good a deal to turn down" sale, so he probably called all the shots to make it stick.
Well, for a centimillionaire. Spending less than 2% of his then net worth (more like 0.2% now though) on his main property was relatively modest. No jets, cars, helicopters, $200m+ London homes.. he seems to spend more time noodling with Dart than spending his money ;-)
>> That's 2.5 instagrams. What do you feel, realistic, too much, too little?
I don't think there's the revenue growth potential in Minecraft like there is in Instagram. On the other hand, Mojang made $330 million in revenue and $129 million in profit last year. They can probably hold on to those margins because their sales system doesn't share revenues with retailers or distributors (or Valve, Google, or Apple for that matter).
The interesting question is whether Minecraft has legs to continue selling for ten or twenty more years. I think it might. I know lots of parents that don't let their kids play video games except for Minecraft. When I pick my kids up from school, I always see a handful of kids wearing Minecraft shirts and carrying Minecraft lunch boxes. It could become like Lego--a toy that's viewed as educational and beneficial by parents.
If I was Microsoft, I'd do two things: First, I'd work on performance and clean up the presentation a bit, especially on the loading screens and menus. Second, I'd roll out a service to make it easy for parents to set up a locked-down server for their kids. You wouldn't believe the number of parents who have asked me for help in setting up a Minecraft server for their kid and his/her friends. I finally stopped showing them because it's too complicated for them to keep running. A service that cost $4.95/month and was reputable, simple, and secure could make a killing.
On the other hand, Mojang made $330 million in revenue and $129 million in profit last year. They can probably hold on to those margins
The margin is interesting, because Mojang supposedly paid Notch personally another ~$129m in licensing fees.
If he has managed to sell the company and will still collect such large licensing fees, he's laughing all the way to the bank. If he sells whatever rights he is licensing to Mojang/Microsoft first, however, then their margin will leap up as their expenses are, in reality, a lot less than they seem due to this arrangement.
I'm curious and seems like no one has addressed this. Notch owns the Minecraft ip and it is licensing it to Mojang. Does this mean Mojang( now Microsoft ) will have to keep paying the license?
I'm not sure if you're aware of it, but Mojang recently (within the last year or so) started a service called Realms[1] which is exactly what you mentioned: hosted, invite only Minecraft servers. The only difference is that it's 13.99 a month, although it's cheaper if you do a longer term (3-month or 6-month). It'll let 10 players on at a time, with a 20 player white list. I'm not sure what their current implementation for Realms' backend is, but if it's not on Azure or another cloud provider, moving to Azure would probably cause a decrease in price.
I do agree about improving performance and presentation within the game though. My understanding is that there is a lot of room for improvement.
There are quite a few Minecraft hosting providers that are even cheaper than that, actually. But it would make sense for Microsoft to handle that themselves.
A large majority of this very loyal following are still < 16 years old. If MS play things right and can retain this following in about 5 years time it will be a very loyal following with a huge reserve of disposable cash then this could become a very profitable move indeed.
Noticing this aggressive downvoting trend quite alot on HN lately. Perfectly valid inoffensive arguments are downvoted just because the downvoter disagrees with them.
I think people get way too bothered about downvotes (myself included). They affect nothing other than color. If someone disagrees with you, good. It means you've taken a stand on something.
I think it's funny how HN likes to think of themselves as free-minded, creative individuals and yet there's a persistent cult of personality around here.
With all due respect, I don't find it particularly relevant what one guy said 6 years ago. I don't care whether he created HN or not. He's no longer an active participant.
Unless you've got something newer to suggest otherwise, that's how HN operates. "Downvotes aren't for disagreeing" is an absurd redditism (everyone knows that they are, since upvotes are for agreeing).
It's a little different on HN due to how the comments are hidden quite quickly when downvoted. I frequently upvote people who reply to me but I disagree with, simply because it would ruin the comment chain and hey, they might just be right anyway ;)
I reserve downvotes for rudeness and demonstrably wrong/misleading comments.
I can understand a downvote with a solid reply, but downvote just for disagreeing doesn't add to the discussion, its more of a censorship which should only be used for offensive/misleading comments IMHO.
Personally, I use upvotes to reward new knowledge or an interesting argument in a comment, I don't upvote every comment I agree with, and downvote only if the comment is offensive.
So then the end result is that opinions/comments that a lot of people disagree with will get punished? Seems counter-intuitive if you're trying to have a reasonable argument/discussion/debate about something. It's one thing to express disagreement, but it's completely different to silence + punish someone because you disagree with them.
"A large majority of this very loyal following are still < 16 years old."
I believe this to be a mythology that "everyone knows is true" although it isn't.
For similar examples, MMORPG players are all 13 year old boys, FPS players in general are all 13 year old boys, there is a perfect 1:1 mapping between WWII FPS and gaming in general...
I'll admit in public to relax I'll log in with my son and we'll work on the big base and rail system. Better than watching TV together. I find rail work to be relaxing exactly like working on a model railroad (obviously you need railcraft mod for this). I like building vast chemical refineries, like a fully automated system where you dump ore blocks in one side, all mixed together, and via AE and IC2 and compactsolars and all that, ingots of metal eventually plop out the other end. I also like multifarming and setting up automated ethanol plants.
From talking to other parents its very fight club where the first rule is we don't talk about it. Kind of like how legos seem to get played with by dad as much as kids, unofficially, although its a kids toy. Like many I have tried to sneak a lego imperial star destroyer past the wife "for the kids", unsuccessfully. Lego seems very expensive compared to when I was a kid...
I disagree with most of what you said. I don't see Minecraft as "for children" game. It was a game made for the full spectrum of the gaming community and its early success was as far as I'm aware primarily adults. The fact that children flock to this game as much as they do surprised me, but for what I hear from parents and teachers I would bet that a large majority of this very loyal following are still < 16 years old.
I have actually spoken with several people who were neither parents or teachers. What I concluded is that even among the game playing techies Minecraft is no where near as prevalent as is is among children. In addition to that parents and teachers also also talk to parents and most parents know little about Minecraft other than that it is a game their children play.
Most of my kids' friends see Minecraft as a game for kids. Except for a few minecraft loyalists, they're moving on to "grown up" games like Call of Duty and Grand Theft Auto.
It's a small sample size, but I think Minecraft is destined to be a kids' game with a minority of adult enthusiasts. (That's not necessarily bad--Lego and Pokemon fit that description, too.)
With an even smaller sample size of my 14 year old from time to time he grows up to more grown up games, but he keeps coming back to Minecraft. He loves the hackability aspect (setting up servers, installing plugins etc..) to it that you don't get from these other games. Now that he is starting to learn to code I am hoping he will start developing plugins as well.
If MS can nurture the hackers and enable them to create and maybe even monetize their hacks, then it should be possible to keep a core set of fans well into adulthood.
Has your son discovered KSP[1] yet? It's got a great modding community, and would, IMHO, suit a keen 14yo perfectly. It suits a keen 37yo perfectly as well :-)
They're buying an IP for the future. Attached to that they also get a company with some staff (some of which are excellent at what they do).
If they have a solid idea of how they want to use the IP, it makes sense. It also comes with a massive risk though - it will be very easy for them to "be the guys who ruined Minecraft".
I imagine it will need to be something like "stay very hands-off for a significant amount of time to prove that they didnt in fact ruin it" followed by some way of turning it into a link in and value add for their existing products rather than something that they sell expansions/new stand-alones for.
Something like Minecraft being the Tetris/Solitaire of the 2010s or so? It comes pre-loaded with their OS's, create a great experience on surface tablets etc, trying to turn it into "the new Microsoft gives you cool stuff and makes it open for everyone" to position Microsoft as the open alternative to the more closed environments of Google and Apple?
I dont see how the purchase makes sense from a money-making point of view today - the Mojang crew hasn't proven they can do repeated success with new IPs, but I could totally see it making sense from a holistic point of view - successful integration of Minecraft in the Microsoft universe could add significant value to Microsoft as a whole.
Insanely profitable, established and growing viral user base. The valuation feels a little high, but not complete insanity made out of unicorn farts and fairy dust.
It's realistic. Minecraft is this generations pokemon. In fact I think it's bigger. Not only boys but a significant amount of girls play it. Not only does it have cultural value it also makes money (which instagram doesn't)
And personally and culturally, I enjoy intelligent conversations about it with my kids, and "approve" of it (as do my friends with kids) in a way I haven't with other crazes.
I think it's reasonable. Minecraft is one of the most popular games in history, period. That says a lot right there. Add to that the fact that it is insanely popular with kids and teens, folks who will continue to have a strong attachment to minecraft as they get older.
Minecraft makes a crazy amount of revenue at present without very much effort being put into monetization. If MS did nothing other than to offer paid high quality hosting and other basic features they'd bring in even more revenue. If they developed the game more thoroughly, came out with a sequel, more merch, etc, they'd be rolling in cash.
Indeed, Minecraft is the most popular non-bundled game ever.
The most popular version of Minecraft in terms of raw sales is the Pocket Edition which is Android and iOS only, so I suspect MS is seeing an opportunity there.
Regardless of what the right amount of money is, microsoft will screw this up.
Repeating the success of minecraft is nigh impossible, it was the confluence of several factors at the right place and the right time. The best that can be hoped for is good stewardship of the minecraft community and client. Unfortunately this isn't the way microsoft thinks about games or products(see halo), expect a Minecraft 2: Creepers Return, Minecraft 3: the Blockening, etc... They didn't spend 2.5 Billion to steward a community.
They won't. They'll just take the C++ ports that already exist (Xbox, mobile) and port that to desktops. Or rewrite the whole thing in C++. While C# is MS' baby, it makes no sense to write a 3D game in it (and for everyone who thinks Unity is C# - it isn't - Mono is just used for scripting).
Minecraft isn't heavy duty graphics, you just need a simple voxel engine. Your game code could be running in python and you wouldn't know any better.
There is quite good reasons not to do everything in C++ if game designers are involved. Unity uses C# for scripting; only the inner graphics engine need be native.
> Minecraft isn't heavy duty graphics, you just need a simple voxel engine. Your game code could be running in python and you wouldn't know any better.
On the contrary, Minecraft is very heavy on the CPU and would benefit from running on native code rather than a managed bytecode based virtual machine environment.
It isn't heavy duty graphics, so you don't need a super strong GPU (it's still quite heavy), but Minecraft is very CPU and memory intensive. Graphics can be fast regardless of the programming language if you unload things to the GPU, but Minecraft requires a lot of CPU side work to prepare the voxel graphics (ie. building GPU vertex buffers, etc from the voxel octree in CPU/main memory).
There are huge potential performance benefits of rewriting it in native code. I don't think that will happen, though.
Here's a recent interesting article about optimizing visibility and minimizing overdraw, in particular for mobile "chunker" (aka. "tile deferred") GPUs. In the end it improves performance but at the cost of even more CPU work.
Reasons to do it in C++ - mobile and console is already in C++, so you can unify ports. Can make fancier graphics - it's Voxel graphics right now, but the next Minecraft could look like Destiny while retaining all the sand-box nature of Minecraft.
You use scripting languages to save dev time - Microsoft can just throw more devs at it. They spent 2.5 billion on it - labour is cheap at that scale...
"Minecraft could look like Destiny"... ahahahah. Sorry. That shows an utter and complete misunderstanding as to the attraction of Minecraft. If MSFT did that, they'd kill it instantaneously.
There is a reason why kids prefer lego batman and lego starwars to real batman and starwars.
I think Microsoft wants all the 7 year-olds writing their first Minecraft mods on a platform that they sell tools for. Given Microsoft has been cozying up to mono, I wouldn't put it past them to port the game over to a platform they can leverage to get little kids using a free version of Visual Studio.
Microsoft will absolutely screw this up. We shouldn't forget why Minecraft became popular: It was run by one (and later a few) guys who were close to the community. They cared about input and made stuff to be fun. They avoided all kinds of big business/management decisions to taint that or get in the way.
There is no way Microsoft will let it run like that. They bought it because they have plans for it and those plans will likely collide with the interests of the community. Microsoft is big in the gaming console business and struggling in the mobile market. It seems likely that they'll try to use Minecraft to push those markets.
Even if they won't do it immediately I suspect that they'll eventually make Minecraft exclusive to Xbox and mobile. Meanwhile they'll drop or decrease support for systems they don't like, like GNU/Linux, Playstations, etc. Maybe this will be part of a rewrite or a new huge upgrade (which I guess we can call "Downloadable Content" or whatever it is called in the XBox universe from now on).
And Microsoft will put their game guys in charge of it. And those guys speak a different language than Mojang. They don't care about indie and close community. They care about downloadable content and making new sellable releases every 12-24 month.
Have you actually ever spoken to one of the MS games guys?
I have. Granted it was around 5 years ago so things have probably changed, but it was around the time they were launching the XBox arcade dev kit and they seemed very genuinely interested in indie dev and supporting communities.
Meat Boy certainly seemed to come about in that kind of positive environment.
Not saying that I'm 100% confident that MS won't mess up Minecraft. I've never played it, but have always enjoyed following Notch and his epic trip with Minecraft as I was once a starry eyed indie game dev. I also have a young child who I know will be into it. Everything I've read seems like Minecraft totally failed to learn from id software and valve when it comes to modding. And still Minecraft mods are massive.
It blows my mind. It also makes me think that MS would have to try REALLY REALLY hard to mess it up. If Minecraft has been a success with all the hurdles so far, I figure it is basically an unstoppable cultural entity now.
> Everything I've read seems like Minecraft totally failed to learn from id software and valve when it comes to modding. And still Minecraft mods are massive.
I have played it but I'm not really a Minecraft person myself. However as far as I know the modding situation isn't that bad because the Minecraft jar can be easily decompiled. The problem is only the lack of a stable API (which seems to be in development though) which means updates can break mods and other mods can break mods. There also doesn't seem to be an official loader or mod list. Thus people are forced to deal with obscure websites and obscure mod makers.
Mojang is not putting any artificial hurdles in the way of modding. Something which I highly doubt would have ever been possible if it had been a Microsoft company.
Instagram was obviously a strategic asset, where Mojang sits in terms of strategy I really don't know exactly. Microsoft and games has always been there, but there's also been recent talk of divesting the games branch. I think one thing is clear which is that Mojang doesn't seem to be a games house that has a reputation of producing consistently successful titles, rather it seems like one indie project blew up and a team was built around that to support and iterate on one single concept. So it really seems clear that they're buying minecraft which is a game that is exceptionally lucrative financially. In the past 24 hours it sold $0.3m which gives an annual run rate of $100m+ for just the game. But perhaps more importantly, it gets huge traction with people of all ages, including kids, and both genders. It's really a cross-over product that sits extremely well with parents. The Raspberry Pi for example is indicative of this, they're only half serious now when they say one of the key requirements is that it has to be able to run minecraft, when this thing is used by kids worldwide in and outside of classrooms. Being able to integrate that with the Microsoft brand is a big deal as you can have an entire generation grow up with positive connotations towards Microsoft, as well as a generation of parents, who know that if their kids will use computers and play games anyway, it'd be great if they'd spend it on minecraft. So I guess it's both highly profitable (though 2.5b is quite steep at 100m annual revenue) but also has strategic value in terms of branding, although I don't yet see how exactly they want to integrate it into their existing games branch.
Integrating with their non-games services seems far more likely. Server hosting, voice chat, mod development, etc can all push people towards MS products.
The Microsoft press release says, "Microsoft expects the acquisition to be break-even in FY15 on a GAAP basis", which means that on a P/E basis, they are valuing $1 of Mojang profit at $1 of Microsoft profit. It's a game studio with 1 hit, so I'd probably only pay half that, but it's within an order of magnitude of what I'd pay.
It's worth noting that the price Instagram sold for was widely considered insane at the time. Now, it's not such a big price, and seems to have been a smart buy.
Personally I feel this makes (much) more sense than instagram, these guys have a very loyal following, a tremendously strong product and actually make money.
Congratulations to everybody on the selling side in this deal, too bad it had to be Microsoft but with amounts like that there are not too many companies on the acquiring side.
Does anyone know if this was stock / cash / a mix?
edit: this Microsoft - Mojang deal will do more to get people into (games) programming than a million $ adspend by codecademy would
edit2: right now (16:43 my time) microjang.com is still free
Wonder how long it will take before that is a registered domain.
edit: microjang.com is now no longer free.