The Cornerplay: Microsoft overpaid for Minecraft by $700 million

Jeffrey Yuwono

Posts: 30   +2

Earlier this week it was confirmed that Microsoft is acquiring Minecraft maker Mojang for $2.5 billion. I’ve got mixed feelings about the transaction.

The strategic benefits are questionable and financially, Minecraft is worth maybe $1.8 billion — a valuation which assumes a sequel is as commercially successful as the original, and which assumes the intellectual property rights founder Markus Persson took out of Mojang are part of the transaction.

The press is speculating that Microsoft is acquiring Minecraft so it can “tap into a cultural phenomenon” and entice players to Microsoft’s platforms.

I don’t buy either explanation.

Read the complete editorial.

 
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"It looks like you are trying too hard"

Take a dumb idea, put it in a nice box, and from geek to a playboy in no time...

P.S. Never underestimate people's stupidity ;)
 
Geez, I would have guessed at least 2 billion. It's now up to MS to prove to us they didn't.
The only way such a high purchase price makes sense is a sequel. The graphics in the first Minecraft are quite basic, so as long as Microsoft can retain the charm and gameplay of the first, I can see existing users upgrading for a better visual experience.
That would be the only way to grab my interest.
But even with a successful sequel, the math only gets us partly there. $1.8 billion to be exact.
There is no way to calculate that figure, until after sales.
 
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I called it in advance. So, I get 3 points. :) I thought that was way too high. See my comments on the news article revealing the original transaction.

I also think Apple paid way too much money for "Beats". I think these companies do this on purpose to create a perception in the minds of the consumers that their crappy product is worth more than it actually is. If the internet wasn't as ubiquitous as it is, they probably could have bought Minecraft for as little as the overpayment alone. But I guess since perception means something there is some kind of strategy in all of this theatre.

I also predict that Minecraft will be a freebie game in the next "Windows" operating system. With tons of nickel-and-dime DLC content to follow. You know the drug dealer routine basically.
 
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It shouldn't take too long to find out what Microsoft gets from this, considering that it said that it "expects the acquisition to be break-even in FY15".

I think these companies do this on purpose to create a perception in the minds of the consumers that their crappy product is worth more than it actually is.

Do you think that even 0.1% of Minecraft players have any idea how much Microsoft paid (or that it even bought the company that made the game)?
 
You have to understand that they aren't buying the game for just a 2 year plan. Minecraft is now very similar to Mario and Tetris when it comes to the future of the IP. An enormous amount of potential with a lot of secondary products (games, toys, clothing, other branded products, etc). They didn't pay so much just to make a profit early on.
It's a gamble where they hope to do as well if not better than what facebook did with it's own purchases Remember the 19 bil for Whatsapp? Remember how everybody was laughing at them for paying so much? Nobody is laughing anymore. The same with Skype.
 
Normally I would say that Microsoft know what they are doing but after the initial Xbox One incredible stupidity I am not so sure anymore.
 
They plan to turn it into another data-miner, just like other popular apps today. Too bad. That's where they plan to recoup their money and make buckets more. It's all about information, not about the game.
 
Obviously MS didn't think they overpaid for Minecraft, err, Mojang. Minecraft is a cultural phenomenon that, while I still don't understand, seems to only to continue to grow. The opportunity for the game is virtually endless and this is a game that made money during its beta period.

The $700 million will probably be seen as small potatoes in the next few years.
 
I see many ways MS will make their money back on this thing. First off they got control of Minecraft realms, a easy way to pay for a stable server. I think MS will be working on cornering the market for servers. I doubt they'll take away the ability to make your own server. But what they will do is change the licensing agreement so that if you want to change others for servers you won't be able to easily. MoJang didn't like the fact people were paying huge money for stuff like diamonds on private servers. With MS I think they will set up large servers you can play on add things like pvp and such and have the ability to do it well. That right there is one way to make money. Another thing I'm sure they will do is licensed skins. Also and I'm sure all you streamers out there don't want to even think about this but you have been making millions and millions from videos on Youtube. If MS wanted they can take all of that revenue or make anyone wanting to show minecraft videos. There are dozens of angles to go at this to make money from toys, movies, TV shows and much much more. I don't think MS over paid as I'm sure they have many more people spending a great time more time then I have thinking about this.
 
This article stinks of.. Someone really old, that has no vision.

Minecraft is much more than just $ - it's now institutional. It's Checkers or Chess. It's here to stay. No sequel needed. Minecraft will be played by this generation and the next 10. It's ingrained itself in the minds of well.. just about everyone. And when the kids playing it these days have kids, it's going to be the game handed down to their kids. Not the sequel. This version. The fact you think it needs a sequel shows you have no clue what is going on with minecraft.

If Microsoft is smart, they will continue to let mojang run it like it is (the developers are still on board don't forget -- Notch, Carl and Jahkobs are leaving -- They haven't had anything to do with Minecraft for a few years now.

trust me. go ahead and buy some Minecraft swag for your great grandchildren. they will love it, wear it, and probably be doing a video series on the game.

2.5 billion? For Minecraft? That's a steal.
 
Minecraft will be played by this generation and the next 10. It's ingrained itself in the minds of well.. just about everyone.

Whoa, stop right there cowboy. The amount of people who has bought it is not even 0.003% of the world's population, not even 10% of US population; let's assume a lot of piracy and that wouldn't make up to 50% of US population. Outside of people who actually know about it and videogames in general, is pretty unknown. I'm not interested in it myself, and only less than 2% of the people I know play it, so don't assume "everyone" will like it.

That doesn't mean no one will like it nor love it, you just can't simply assume "just about everyone" will have the same opinion.
 
So how does Microsoft expect to make up the $700 million difference?
Who says they have to? Perhaps that's the price of keeping the game out of the hands of a competitor. It's why FB paid so much for Whatsapp. It's not because the product was necessarily worth that much, but because keeping it away from your competition was worth that much.
 
Are you guys ready for the Microsoft Gate of DRM, paid subscriptions, and locked down content only accessible through the Windows Store? Microsoft is going to rape this game into submission, say goodbye to one of the greatest games ever made.
 
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