Microsoft on Monday confirmed that it will acquire the studio that created the hit "sandbox" game Minecraft for $2.5 billion, a move that could help bolster the company's Xbox and mobile ambitions.
Microsoft said the deal will close by the end of this year.
"Minecraft is more than a great game franchise," said Microsoft CEO Satya Nadella. "It is an open-world platform, driven by a vibrant community we care deeply about, and rich with new opportunities for that community and for Microsoft."
Launched in 2009 for PCs, Minecraft is an open-world game where players roam a simple landscape with forests and beaches, breaking apart the environment and building new objects like a digital Lego set.
It has surged in popularity over the past five years. Microsoft says the game has topped 100 million downloads. Although it has been available on Apple's iOS devices for nearly three years, it is currently the second most popular paid app for iPhone. Retail versions of the video game for the Xbox 360 and PlayStation 3 were the third best-selling titles in the U.S. last month, according to NPD Group.
"The functionality in what you can actually build is off the charts," says FBR Capital Markets analyst Daniel Ives. The game has spawned the creation of incredible landscapes, including homages to Game of Thronesand The Hunger Games.
"The Minecraft players have taken the game and turned it into something that surpassed all of our expectations," Mojang CEO Carl Manneh said. "The acquisition by Microsoft brings a new chapter to the incredible story."
Microsoft says Minecraft will remain available on all current platforms, including PlayStation, a rival to the company's Xbox brand.
In a separate statement, Minecraft creator Markus "Notch" Persson revealed he will leave Mojang when the deal is complete.
"Thank you for turning Minecraft into what it has become, but there are too many of you, and I can't be responsible for something this big," said Persson. "In one sense, it belongs to Microsoft now. In a much bigger sense, it's belonged to all of you for a long time, and that will never change."
The Minecraft deal bolsters support from Nadella for the company's Xbox brand, which had been rumored as a potential sales piece. However, in a memo sent to employees in July, Nadella said the company will "continue to grow and innovate" the brand.
But the Minecraft deal stretches beyond games. Snagging one of the video game industry's hottest properties should help Microsoft grow its Windows Phone line, which sits a distant third from giants Apple iOS and Google Android.
"Minecraft strengthens Microsoft's hand in the battle with Google, Apple and Amazon," says IDC analyst Al Hilwa. "In the battle for mobile dominance or relevance, platform owners have to tussle with each other, trading and bartering mutual support for popular consumer services across their mobile platforms. Minecraft is a solid business with intense user loyalty."