Microsoft Set to Buy Minecraft Maker for $2 Billion

Software Giant Will Keep Game Available for Competitors

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Microsoft Corp., maker of the Xbox video-game console, is in discussions to acquire Mojang AB, the software company behind the popular game Minecraft, for more than $2 billion, three people with knowledge of the talks said.

Microsoft, the world's largest software maker, is in serious talks with 4-year-old Mojang, said the people, who asked not to be named because the negotiations aren't public. The deal may be concluded as soon as this week, though next week is more likely, said two people.

A purchase of Mojang would be the biggest deal struck since Satya Nadella took over as Microsoft's CEO in February, succeeding Steve Ballmer. Mr. Nadella has been shifting the company's focus more toward Web-based services and cloud computing. It has also renewed a push to woo serious gamers to the Xbox, following a lackluster attempt to turn the system into a device to serve up broader content such as movies and music.

"It's one of the greatest success stories in gaming over the last 10 years," said Doug Creutz, an analyst at Cowen & Co. in New York, referring to Mojang. "They've sold a lot of copies of Minecraft over the Xbox."

Frank Shaw, a spokesman for Redmond, Wash.-based Microsoft, declined to comment yesterday. Jonas Maartensson, a VP at Stockholm-based Mojang, declined to comment. Microsoft's talks with Mojang were reported earlier yesterday by the Wall Street Journal.

If a deal is reached, Microsoft plans to pay for an acquisition with cash held overseas, one person familiar with the company said. That would have favorable tax consequences for the software maker, whose vast majority of cash and short-term investments are kept outside the U.S.

The deal came together after Mojang founder Markus Persson reached out to Microsoft a few months ago, based on a positive working relationship on Minecraft for Xbox, said the person familiar with Microsoft.

The two companies quickly agreed on a framework and approximate price and have been working out the details since, the person said. Mr. Persson will help out with the transition, though he is unlikely to remain beyond that, according to the person.

Xbox chief Phil Spencer has a close relationship with Mr. Persson, and has flown out to have dinners with the Mojang founder, another person familiar with Microsoft said.

The software maker calculates it can boost Minecraft sales by expanding the number of game users through Microsoft's position in video games and computers, and by expanding licensing for things like toys and movies, said one of the people.

Mr. Persson founded Mojang in 2010, after he coded Minecraft on a lark in 2009 as a side project when he came home from working his day job at King.com, a U.K.-based gaming site.

For a while, users could only buy Minecraft on Mr. Persson's website, where it retailed for 15 euros. The game puts users inside a vast, pixelated landscape. The goal, as much as there is one, is to avoid being eaten by monsters that come out after dark. By April 2011, Minecraft, which is a bit like playing Lego in a virtual world, had sold more than 1.75 million copies.

Minecraft is made for multiple platforms including consoles, computers and mobile devices. As of June, Mojang had sold more than 54 million copies of the game in all its forms. It was the No. 2 best-selling game by physical retail copies sold in July for the PlayStation 3 and Xbox 360, behind Sony Corp.'s "The Last of Us" for PlayStation consoles, according to research firm NPD Group Inc. It was the No. 3 game in June.

Minecraft was made available for the newest generation of consoles, Xbox One and PlayStation 4, earlier this month. Microsoft, if it completes the deal, will keep the game available for rival products, said two people familiar with the company's plans.

The company thinks that this kind of product, like its Office productivity software, has to be available with high- quality versions for multiple platforms, including those of its rivals, the person with knowledge of Microsoft's thinking said.

--Bloomberg News

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