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Why Minecraft may be worth $2B for Microsoft

New rumors say Microsoft (MSFT) is in discussions to buy Mojang, the company behind Minecraft, a well-known video game that lets players create structures out of 3D blocks. The price is said to be more than $2 billion, according to The Wall Street Journal.

Such a deal would be interesting because Mojang founder Markus Persson has never been shy about displaying his differences with Microsoft. But $2 billion could make a big difference. The advantage to Persson and Mojang, which has resisted outside investment to stay independent is clear: That would be a lot of money to turn down, even when your company reportedly made $100 million last year in profit.

For Microsoft, the deal also makes sense. Buying the cross-platform game fits into the company's evolving strategy of focusing on consumers, devices and cloud computing. It has a long-standing interest in gaming, as the evolution of the Xbox console line shows. Games are a non-PC path into consumers' homes, and Microsoft has been widely successful in that regard.

Plus, Microsoft has invested in major gaming titles before, as when it bought the Halo franchise. Here are some of the draws Minecraft has for Microsoft:

  • Minecraft is strongly popular with younger users, a demographic that's critical to consumer electronics and software.
  • The potential for taking popular titles and finding ways to make them available on mobile platforms could open a lot of doors for Microsoft, which has repeatedly flopped in the market. Mobile versions of Minecraft already exist.
  • The multidevice support in mobile also fits in with Microsoft's new approach of making some of its critical mobile software available on more than just Windows Phone.
  • If the $100 million profit estimate is accurate, the purchase could add solid additional money to Microsoft's bottom line.

The interesting question is how Microsoft would further develop its interests as time goes on. Small companies that can break through and create popular titles might suddenly find themselves attractive acquisition targets.

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