Virtual reality.

Minecraft's World Could Be Worth $2 Billion

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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Microsoft's willingness to pay a whopping $2 billion for Mojang, maker of the Minecraft computer game, might make more sense than meets the eye: The software giant would be getting an entire virtual world, which could prove a lot more valuable than a mere game company.

The off-the-charts price -- more than twice as high per dollar of revenue than the current market valuations of Zynga, maker of FarmVille, and King Digital Entertainment, the Candy Crush Saga developer -- is apparently a magic number for Mojang founder Markus "Notch" Persson. "My price is two billion dollars. Give me two billion dollars, and I'll endorse your crap," he tweetedback in 2012. A developer first and businessman second, Persson doesn't think in terms of multiples and revenue. "We try to make games we want to make for the sake of making fun games and not necessarily to make a profit," he said in a 2013 interview,

Minecraft now has a life of its own -- Persson has not been involved in its development since 2011. The game can best be described as "computer Lego." Players "mine" blocks from objects found in a pixelated, highly abstract world, and then build their own structures, while defending themselves from monsters. The possibilities are infinite, and advanced players are as much fun to watch as skilled builders at work.

"Although the virtual world may be simple in nature, and void of strict rules or structure, it is the epitome of play in which players create, destroy, and re-create with godlike revelry," Australian game researchers James Hooper and Penny de Byl wrote in a recent paper.

Because Minecraft gives players the freedom to use their creativity however they want, without following a script, Mojang is different from other game companies: It doesn't need to produce more hit games to keep growing. Like Lego -- now the world's biggest toy company -- Mojang runs a borderless, expanding world rather than producing finite entertainment experiences. It is more than a game -- it is a participatory ecosystem of more than 100 million people.

"Minecraft’s form as a video game structures participation in a very particular way, but its role as a platform -- not only literally as software but also metaphorically as a foundation on which participants build ancillary media -- enables unique participatory behaviors to occur that the platform can support both technologically and socially," Alex Leavitt of the University of Southern California wrote.

No wonder that, like Lego, Minecraft is being used as a teaching aid in various disciplines. Apart from making money on updates to the game, Microsoft could take it in as many directions as the players do -- from movies (one is already being made by Warner Bros.) to amusement parks to educational programs. Mojang already has a deal with Lego, which makes popular Minecraft sets.

Is it worth $2 billion? Hard to say. Lego would be worth much more than that if its owners, the Kirk Kristiansen family, ever decided to sell.

The best games are those that create alternative realities that are almost as flexible, versatile and full of surprises as the real world. Lego and Minecraft are like that, and therefore their owners do not have to worry about constantly improving graphics, thinking up more complex scripts or following gamer fashion. Most people like to be passively entertained, but many also like building things and contributing to a vibrant community. That's what makes Mojang unique as an investment opportunity.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor on this story:
Mark Whitehouse at mwhitehouse1@bloomberg.net