The business behind Minecraft

Abdul Adil loves to build. The 13-year-old, who lives in London, says he has created palaces, castles and an entire theme park filled with rollercoasters and carousels. Some may like to build using wooden, medieval stylings but Abdul’s preference is for modernist, colourful decor. “I like the look of the new stuff, rather than the old,” he says. “I can relate to it more.”

Eagerly, I tell him I’ve started building recently too, constructing a house with two storeys and sprawling staircases, all over a single weekend. Abdul is unimpressed. He makes structures with friends, few of whom he has met in person, but who discuss their projects over the internet. “If you’re on your own, it’s kind of boring just building your own house,” he says. “If you build with other people, it’s more fun ’cos you can joke around and stuff like that.”

Like millions of other schoolchildren — and a fair few of their parents — Abdul builds within Minecraft, one of the world’s most popular computer games. New players are dropped into a blocky world of trees, lakes and verdant landscapes. There are few rules or instructions but players learn, early on, that they must avoid exploding zombies when night falls, encouraging them to quickly build shelter. After a few minutes of poking around, they realise this is a digital Lego set, its only limit their imagination.

Just as the Minecraft world sprawls in front of new players, providing a seemingly endless horizon, so the game has become a global phenomenon that has grown far beyond what its architects ever imagined. Estimates suggest that more than 100m people play, through consoles, PCs and smartphones. They have created starships that float in the sky, a replica of Paris’s Notre-Dame cathedral and entire scenes from The Lord of the Rings.

In contrast with other popular games such as Call of Duty, with its focus on bloody violence, or World of Warcraft, which attracts socially awkward obsessives who lock themselves within fantastical avatars, there are few howls of protest about Minecraft rotting the minds of impressionable youth. Quite the contrary. Parents play with their offspring. Thousands of schools worldwide have included Minecraft in their curriculum. Psychologists extol its aid in developing a child’s cognitive functions in creativity and problem-solving.

This weekend, 10,000 eager fans will descend on London’s Excel centre for a global gathering called Minecon. Attendees are expected from as far away as China and Mexico. Many will dress up in outfits made of cardboard boxes to imitate the pixelated look of game’s characters. For two days they will do nothing but play, discuss and immerse themselves in Minecraft. According to the organisers, tickets were sold out in minutes.

Events like this have fuelled excited talk of the emergence of a Generation Minecraft — idealistic young people who use technology collaboratively, working together to create new worlds. Yet as Minecon gets under way, some gamers and industry analysts worry about the future of the Minecraft universe. There are fears the success of this unlikely utopia might ultimately lead to its downfall.

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To understand these doubts, you have to understand the man who laid the foundation block of the game: Markus Persson, the 35-year-old Swede who is the creator of Minecraft. Rarely spotted in public without his signature fedora hat, he is known to the game’s multitude of players by his nickname “Notch”. Last September, he sold Mojang, the Stockholm-based games studio that runs Minecraft, to Microsoft in a deal worth $2.5bn. The deal made Persson, who reportedly owned 71 per cent of the company, one of the world’s youngest billionaires.

“In the usual narrative, when it comes to tech start-ups, an acquisition by a big tech company like Microsoft is the happy ending,” says Daniel Goldberg, who, along with fellow Swedish journalist Linus Larsson, wrote an excellent book on the game’s development — Minecraft: The Unlikely Tale of Markus ‘Notch’ Persson and the Game that Changed Everything. “It’s the end point everyone is hoping for. Everyone becomes rich and is happy riding off into the sunset. In the case of Minecraft, I’d argue that’s not the case.”

Persson, who rarely speaks to the press and did not respond to multiple requests for comment, was a high-school dropout who taught himself how to code. In his early twenties, he quit working for two major Swedish gaming studios, dissatisfied with work he deemed derivative. He felt more passionate about the growing independent gaming subcult­ure, where coders create games for their own sake, releasing them with little financial backing.

In May 2009, Persson uploaded the game to TIGSource, a favourite forum among indie games developers. As it grew by word of mouth, he made decisions that broke with industry conventions. For one, Minecraft is relatively unusual because it is a “sandbox” game in which, instead of players inhabiting the same space and following a defined storyline, each person creates his or her own game server on their computer. This gives each player a private online world that they control, through which they can invite others to join.

Another key decision was about how Minecraft makes money. Other recent indie gaming hits, such as Candy Crush Saga or Clash of Clans, have a “freemium” model. Players download for free, with the games-makers making cash from a small minority who are willing to pay for in-game purchases, such as virtual items that help them advance the game. Persson decided to charge Minecraft players a flat fee from the outset. Today, people pay around $5-$30, depending on what machine they play on. In return, all additional updates and features are automatically provided free of charge.

As Minecraft took off in popularity, Mojang achieved a rare thing for a tech start-up: financial independence. By last year, the game was raking in cash. Mojang revealed that it had earned around SKr816m in 2013 ($128m at the time), up from SKr325m a year earlier. Perhaps inevit­ably, the world’s leading venture capitalists and techno­logy companies made repeated offers to invest or buy Mojang outright. On one occasion, Sean Parker, billionaire co-founder of file-sharing service Napster and former president of Facebook, flew Persson and Mojang’s two other co-founders Carl Manneh and Jakob Porsér, to London in a private jet. They partied together and got drunk but declined Parker’s offer to invest. They simply did not need the money.

What changed? The trigger appears to have come in June last year, when Mojang clamped down on players who were charging others for access to certain perks. The move upset many, who took to social media to voice their anger. As Persson wrote on Twitter, “Anyone want to buy my share of Mojang so I can move on with my life? Getting hate for trying to do the right thing is not my gig.” A Microsoft executive saw the tweet and inquired if Persson was serious. As it turned out, he was.

Microsoft declined to discuss the details of the acquisition, but people familiar with the deal said Mojang’s co-founders insisted that, with any sale, they would leave the company. This is highly unusual in such transactions, as buyers tend to demand that the previous leaders stay on during a merger to help aid the transition.

As the acquisition was announced, Persson wrote, in an emotional open letter: “I’ve become a symbol. I don’t want to be responsible for something huge that I don’t understand, that I don’t want to work on, that keeps coming back to me. I’m not an entrepreneur. I’m not a CEO. I’m a nerdy computer programmer who likes to have opinions on Twitter.”

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The sale was also a huge, and not necessarily welcome, surprise to Mojang’s 40-odd staff, many of whom bought into Persson’s rhetoric of forging a radically different path from the rest of the industry. Daniel Rosenfeld, composer of the Minecraft soundtrack, recalled: “The days before the sale went through, I felt betrayed by Markus.”

According to Goldberg and Larsson’s book, Microsoft headed off an insurrection by offering SKr2m ($300,000 at the time) to all Mojang staff who stayed on for at least six months. Unlike at other start-ups, according to people familiar with the situation, Mojang staff had no equity in the company, so the only people to benefit financially were the three co-founders. Presented with a small fortune, Mojang’s staff stayed on.

“Obviously, in any type of acquisition like this, there will always be people worried about the future and what will happen to them,” says Jonas Mårtensson, managing director at Mojang, who has run the division since the founders left. “But I think Microsoft . . . did a really great job of making sure people were comfortable and taken care of . . . in terms of morale, I’d say we’re in a really good spot right now.”

These ructions are only part of the reason why some doubt Minecraft’s longevity. Others question Microsoft’s motives. Minecraft makes a profit, but the figures are puny compared with Microsoft’s overall revenues. Does the US conglomerate plan to run the game for the benefit for its players, or does it have some other plan in mind?

In June, at the annual E3 (Electronic Entertainment Expo) conference in Los Angeles, Microsoft gave an indication of what its answer might be, with a demonstration of HoloLens, a virtual reality gaming device. These looked like a pair of unwieldy goggles but, in the eyes of the beholder, generated a hologram of a Minecraft world rising above a table, with a player able to manipulate this 3D image. An audience of thousands of gamers roared their approval.

“HoloLens is the one-plus-one-equals-three situation,” says Matt Booty, general manager of Redmond Game Studios at Microsoft. “We have the best of a small games studio, which has a fantastic game, along with the best of a large company that can invest in some very forward-looking technology.”

For James McQuivey, a technology analyst at Forrester Research, the significance was clear: “When Microsoft first made the acquisition, and I spent time looking at the money and the numbers, [I thought] the only way they could make this pay off is to make it into the next Lego franchise,” he says. “You could invite brands to advertise in Minecraft. You could make Minecraft movies. Then HoloLens dropped and it all made sense. You could buy Minecraft purely as a way to present HoloLens.”

Microsoft is betting on HoloLens being a multibillion dollar opportunity, a revolutionary piece of kit on which to play the games of the future. Other companies are making a similar wager. Facebook recently spent $2bn to buy Oculus Rift, a maker of virtual reality technology.

But McQuivey, like others, worries what this means for Minecraft. He wonders if the game is simply a disposable showroom for HoloLens, rather than a franchise that Microsoft plans to invest in significantly. Microsoft has said little on how it plans to expand and develop Minecraft, though there are hints that it may reveal more during Minecon.

“If I were at Mojang, I’d ask, ‘What’s our next move after HoloLens?’ ” says McQuivey. “And if the answer is a blank look, that would tell you Microsoft haven’t thought that hard about it.”

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After the sale to Microsoft was announced, players took to internet forums in what now reads like a group-therapy session. Some were angry at the decision by Persson to sell, while others expressed sympathy for the reasons behind his departure. “I love Minecraft but many of its fans are absolute monsters,” wrote one. Mainly, there was concern for the future. Would Microsoft begin charging for updates? Would it close off “Mods” — alternative versions of the game, where coders have altered the original content for their own purposes? One Reddit user, SpikeX, summed up the thoughts of many: “Dear Microsoft, Please don’t fuck this up. Sincerely, 50 million+ players.”

Matt Booty seeks to reassure fans, saying Microsoft plans to invest in the game itself “in the long term”. Rather boldly, he adds: “There is in my mind . . . no reason why Minecraft shouldn’t be around 20 to 30 years from now.”

Perhaps Microsoft needs to do little to maintain the game — it has plenty of ‘Minecraft’ evangelists willing to spread its gospel

Perhaps Microsoft has identified that it needs to do little to maintain Minecraft. As events like Minecon show, there are plenty of evangelists willing to spread its gospel. Online, too, a huge Minecraft industry has emerged to satisfy the fans. According to gaming research group Newzoo, Minecraft-related YouTube videos were watched 4bn times in May 2015 alone. The makers of these videos, often other young games lovers, provide entertaining tutorials and commentaries.

Other companies are seeking to capitalise on the trend. Last year, Amazon paid close to $1bn for Twitch, an online video-streaming service for gamers. Machinima, a Los Angeles-based group, runs a network of 30,000 YouTubers who create games-related clips. It provides creators with access to advertisers and sponsorship, with a video-creator taking a 60-95 per cent of advertising revenues generated by their work. Machinima’s videos get 3.6bn views a month. It estimates that some 10 per cent of those videos relate to Minecraft and that this audience is rising.

Jerome Aceti, 21, is one of those making Minecraft videos. He lives in St Petersburg, Florida, with three fellow YouTubers, where they play games and make videos all day. Aceti has 3.7m subscribers on YouTube, with 50,000 joining every month. He declines to say how much he earns, but says it is lucrative enough to have dropped out of college.

Is he worried that Minecraft may be a passing fad? Or something his mainly school-age audience may grow out of? “My big hope is to not just stay in Minecraft YouTubing, but that I move on to a different form of entertainment or video gaming,” Aceti says. “I’m not sure Minecraft will last, but hopefully I’ll find my next niche.”

For now, fans remain hooked. Abdul Adil reads the online forums and knows that Notch — “His real name is too hard to remember” — sold Minecraft and that not everyone is happy about it. But the teenager is undeterred. “I’m more excited now because I know the game more,” he says. “I know almost everything so I’m really good at it.”

Murad Ahmed is the FT’s European technology correspondent

Illustration by Lindsay Lombard

Photograph: Photoshot

Letter in response to this story

Your big Minecraft picture is wrong / From Zorawar Bhangoo