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Mojang's no-VC Minecraft bet: $2.5B Microsoft exit
Minecraft sold directly to players in alpha, funded Mojang with zero investors — about $330M revenue in 2013, then a $2.5B sale to Microsoft.
Mojang
What the business is
Swedish studio selling Minecraft, a blocky sandbox game, across PC, mobile and consoles — funded entirely by game sales.
How it started
Markus 'Notch' Persson built Minecraft as a side project while working as a web developer in Stockholm. In 2009 he put an unfinished alpha build on sale on his own website, and pre-orders took off by word of mouth. He co-founded Mojang with Jakob Porser and Carl Manneh in 2010; by the studio's official launch in January 2011, Minecraft had already sold a million copies.
What happened
Mojang stayed deliberately small and independent, with around 35 employees, monthly founder board meetings and no investors. GamesBeat reported the studio made nearly $240M in revenue in 2012 with pretax profits of about $89M; CNBC reported 2013 revenue around $330M and profits of $128M, with Minecraft about 90% of sales and more than 54 million copies sold. The founders repeatedly turned down outside money.
How it ended up
On September 15, 2014, Microsoft announced it would buy Mojang for $2.5B, with the deal expected to close by the end of the year. Founders Persson, Manneh and Porser left the company; Persson said he no longer wanted the responsibility of owning something of such global significance.
Background
Minecraft began in 2009 as a side project by Swedish programmer Markus 'Notch' Persson, who put an unfinished alpha build on sale on his own website. Players paid for the game while it was still being made, and word of mouth turned a hobby into a business: by the time Mojang officially launched in January 2011, a million copies had sold.
Mojang stayed deliberately independent. It had around 35 employees and zero investors, with the three founders making decisions over monthly dinners. GamesBeat reported 2012 revenue of nearly $240M and pretax profit of about $89M; CNBC reported 2013 revenue of roughly $330M and profit of $128M, with Minecraft accounting for about 90% of sales and more than 54 million copies sold.
In September 2014, Microsoft agreed to pay $2.5B for Mojang, expecting the deal to close by the end of the year. All three founders left; Persson explained that the pressure of owning something so globally significant had become too much. The company that had never taken outside money sold for more than seven times its 2013 revenue.
What has to be true
- Selling an unfinished game directly to players was the wedge: customers funded development before release, so Mojang never needed investors or debt.
- Keeping the company tiny and independent let the founders change strategy in an evening, without external boards or venture timelines.
- Profits came from a single product loved by tens of millions, and the founders stayed whole owners of that success.
- When the founder no longer wanted the responsibility, the lack of outside shareholders left the exit decision entirely to the three founders — a $2.5B sale to Microsoft.
What can be applied
A product players love enough to pre-buy while unfinished can fund a company entirely from sales: no investors, no marketing budget, and full ownership of the eventual $2.5B exit.
Aftermath
Microsoft completed the acquisition, and Mojang continues to operate as a studio within Microsoft, keeping Minecraft on PC, console and mobile. The three founders all left at the time of the sale. Minecraft has remained one of the best-selling games in the world under Microsoft, and the franchise has since expanded with spin-off games and a film.
Sources
- State of independence: An inside view of Minecraft developer Mojang
- Why Microsoft is buying 'Minecraft'
- Microsoft confirms it will buy 'Minecraft' for $2.5 billion
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