The Minecraft acquisition enhances Microsoft’s mobile presence


Sep. 30 2014, Updated 6:05 p.m. ET

The Minecraft acquisition aims to enhance Microsoft’s presence in the mobile space

Microsoft (MSFT), to attain success in the mobile space, has to generate the interest of the young population, developers, and apps in its mobile platforms, Windows Phone and Surface. Through its Minecraft acquisition, Microsoft aims to bring visibility to its Windows Phone operating systems (or OS) and Windows Store—a mobile app store.

The Windows Phone OS is far less successful, owing to its lack of customer engaging applications, compared to Google Android (GOOGL) and Apple iOS (AAPL). Samsung (SSNLF) is another leading player in the mobile space.

The above chart shows that, among the investments in the gaming sector in 2013, mobile leads the market.

The Minecraft acquisition is in line with Microsoft’s CEO’s strategy for the mobile and cloud spaces

Since Satya Nadella took over as CEO of Microsoft, Minecraft’s acquisition is the biggest acquisition under his leadership. In 2014, Nokia’s acquisition by Microsoft of approximately $7.2 billion also finalized.

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Satya Nadella has clearly emphasized that the company has shifted its focus now to web-based services and cloud computing. The recent acquisition of Minecraft clearly is a step forward in this direction. Through this acquisition, the Xbox video game console as well as Windows Phone are likely to capture the attention of the gaming population.

The gaming industry is rapidly moving towards the mobile space

According to Digi-Capital, an investment bank, mobile games could drive the global game industry’s software revenue to $200 billion by 2017. The bank also expects the mobile and online gaming industry to reach $60 billion by 2017 at a compound annual growth rate or CAGR of 60%.

The mobile industry is providing a suitable platform for the gaming industry to grow. It accounted for 32% and 67% of mobile app and tablet use, respectively. In 2013, games accounted for 72% of mobile app revenue and 40% of mobile app downloads.

The Minecraft acquisition provides Microsoft an edge over other operating systems

Microsoft has shared its intent of maintaining Minecraft’s presence on diverse platforms, including Apple iOS and Sony (SNE). It’s the top paid app for iOS and Android in the U.S. After its acquisition, these companies are forced to adhere to Microsoft’s licensing fees or revenue sharing models or risk losing out on one of the most popular games.


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