Hit game Minecraft to stay private

STOCKHOLM Mon Feb 4, 2013 3:01pm IST

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STOCKHOLM (Reuters) - A pool table, a pinball machine, board games and Lego dot the offices of Mojang, the small Swedish company behind the wildly popular Minecraft video game, and one of its founders is wearing a tuxedo and purple tie on a recent "formal Friday".

The atmosphere reflects the independent spirit that has contributed to the raw identity of the game that has just sold 20 million copies. The founders want to keep it that way.

Mojang, the Swedish word for gadget, has so far resisted selling to a bigger player or listing on the stock market even though that could mean monster payoffs for the 25-person staff and funding to expand dramatically its games.

"We are living the dream, really," Carl Manneh, 35, one of the three founders told Reuters. "An exit would be huge, but do we really need that money? In our case, we have the cash flow. We have more money than we need."

"We've always felt that the independence we have is one of our core strengths. We can take decisions by going into a room and in 15 minutes we're done. We try to be extremely agile, to release games quickly."

The strategy contrasts with other regional developers including Swedish video gamer DICE, sold to The Sims publisher Electronic Arts (EA.O) in 2006, or Rovio, the Finnish start-up behind Angry Birds which may soon be listed for $6-9 billion.

Analysts said Mojang's approach makes sense for now.

"It's such a small seed of an idea, but which works very powerfully, so they do not need to scale up to several hundred people to bring this to the audience in new ways," said Steve Bailey, senior games analyst at IHS Screen Digest.

"I suspect they are just trying to keep it as low key as possible while they try and understand what they could do with it," he added.

YOUNGER USERS

Minecraft was created by one person - Mojang co-founder Markus Persson.

A kind of digital game of Lego where players build virtually anything block-by-block in either creative or survival mode - when they face killer zombies - Minecraft was released in 2011 and has spread like wildfire, mostly by word of mouth.

Part of its appeal is that it is raw, a kind of work-in-progress which developers are constantly upgrading as opposed to big publishers which go for a single, fixed release. That helps users feel they are part of, and can help shape, the game.

Initially a hit with 25-35 year olds, it has more recently taken off with 10-12 year-olds and their parents, with millions of people showing off their Minecraft creations on Youtube.

One recent example was a spectacular rendering of King's Landing, a city in the "A Game of Thrones" novel, which reportedly took a team of 100 "builders" four months to make.

More than nine million purchases of Minecraft have been made on PC or Mac. Adding other platforms, that rises to 20 million.

If sales stay at their current breakneck pace, Manneh believes they have a chance to knock "The Sims" from its throne as the world's best-selling game for PCs and Macs. The original Sims sold more than 16 million and on all platforms, sales of the franchise top 150 million.

"It looks like we are going to outsell The Sims in one or two years if things progress," he said.

PREDICTIONS TRICKY

Chris Hickley, a software and IT services analyst at Atlantic Equities, said anything topping 10 million for PC is usually considered a "phenomenon".

"Whether or not they (Minecraft) can sell another 10 million is difficult to say because at that point it's starting to approach unchartered territory for game sales," he said. "It's tough to predict if it will peter out or keep going."

IHS Screen Digest's Bailey agreed that predictions were tricky in a sector where some young companies had been significantly overvalued in recent years.

"A year from now, Minecraft could be a footnote or we could all suddenly be conducting our business meetings in a virtual room in a Minecraft universe," he cautioned. "Delirious headlines can obscure the longer term volatility there."

The third founder Jakob Porser, also a developer, said they were worried that the game might have peaked late last year.

"The numbers were going down slightly before Christmas, and we were wondering, oh, has it peaked? Then Christmas hit and there was a massive surge," he said.

Investors would love to get their hands on Mojang, which last year had a 1.5 billion crown turnover, most of which was straight profit.

Sean Parker, Napster co-founder and one of Facebook's (FB.O) earliest investors, tried to convince the founders to let him in, flying the three on his private jet to London for a party.

They turned him down, and they say they have also said no to nearly every major gaming company in the world.

Porser, who is working on a new game called Scrolls which Mojang will launch this month, is not looking for an exit either: "You can only eat so much until you get full, right? We are so happy where we are."

For a story on Swedish tech start-ups double-click on [ID:nL5N0AX9HQ] (Editing by Mike Collett-White and Anna Willard; editing by David Stamp)

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