Microsoft may be set to acquire Mojang, the privately held maker of the virtual, viral world-building game Minecraft, for a reported $2 billion.
How can a game that has no set story line, or even rules, and features blocky graphics that would be state-of-the-art if this were 1989 be worth almost twice what Redmond recently paid for business networking specialist Yammer? Or nearly double the $1.2 billion it shelled out for enterprise search giant Fast Search & Transfer in 2008?
Most obviously, gaming is a key part of Microsoft’s portfolio and Minecraft may just be the hottest game on the planet at the moment. Mojang had sold more than 54 million copies for all platforms as of June, according to the Swedish company.
Minecraft’s popularity pushed the vendor’s revenues to $330 million in 2013, up 38 percent from the previous year. Profits came in at $129 million, for a margin of almost 40 percent.
Microsoft’s overall profit margin for the quarter ended June 30 was about 20 percent.
But Microsoft’s interest in Minecraft, developed by Swedish programmer Markus Persson, may go well beyond simply adding to its content stable.
The game could be a desperately needed “killer app” for Windows Phone, which trails well behind rival mobile platforms iOS and Google Android in the smartphone market — despite Redmond’s $7.2 billion acquisition of Nokia’s handset business earlier this year.
Minecraft, first launched for the PC in November, 2011, is currently also available for the iPad, iPhone and Android phones, as well as consoles like Xbox and Sony’s PlayStation, but it's conspicuously absent on Windows Phone.
Apps are what drive phone sales and use. Mobile apps account for 52 percent the time consumers spend with all digital media, according to market watcher Comscore. Games, meanwhile, account for 16 percent of mobile app usage time, trailing only social media’s 25 percent.
It’s hard to think of a game that could goose Windows Phone sales more than Minecraft. Much of its popularity derives from the fact that users play in an open universe in which they can create a world in their own image or any other way they choose. Players use tools like pixelated pick axes and more to populate varying terrains with houses, roads, offices and other structures. They can use creatures spawned in-game, such as cows, pigs and chickens, for food and materials, while fending off nasties like skeletons, spiders and zombies that randomly appear.
Gameplay follows a clock that compresses a single day into 20 minutes of game time.
The game encourages players to be creative and make their own adventures, so it’s popular with kids and parents who want their children to exercise their minds whilst glued to their phones. There are even customized versions of Minecraft for schools, from the outfit TeacherGaming, founded by a former New York City school teacher.
Minecraft also lets users play online with friends through private cloud servers.
Beyond tots and their parents, Minecraft has caught on with a growing list of celebrities, including Jack Black, Deadmau5, Mila Kunis and English comedian Johnathan Ross.
“It’s a complex enough game and robust enough that people still remain committed to it,” Morningstar analyst Norman Young told CNBC.
Microsoft may be betting $2 billion that that commitment holds up over the long term. Representatives for the company did not immediately respond to a request for comment.