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Microsoft considers buying gaming gold mine Minecraft

U.S. game sales topped $21 billion in 2013, double the amount earned at North American movie theaters. As the influence of the gaming industry grows, Microsoft is making moves to purchase a gaming company that makes Minecraft, a popular, retro-inspired exploration game. Stephen Totilo of Kotaku joins Hari Sreenivasan for a look into the possible deal.

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  • GWEN IFILL:

    There are new reports out of yet another tech giant, in this case Microsoft, trying to purchase a popular gaming company. It's part of an industry and market that you may not know about unless you are wise in the ways of Xbox and PlayStation.

    Game sales in the U.S. topped $21 billion last year. The industry often boasts that it earns far more than what Hollywood makes at the U.S. box office. And more than 70 million people worldwide watch games played as e-sports over the Web or on TV.

    Hari Sreenivasan has more from our New York studios about this potential deal and the wider phenomenon.

  • HARI SREENIVASAN:

    In the hit game "Minecraft," players maneuver through a LEGO-like landscape to build whatever they can imagine or to battle monsters, as seen in this YouTube video by the game's Swedish creator, Mojang.

  • WOMAN:

    Yes, it's very popular.

  • HARI SREENIVASAN:

    With more than 50 million copies sold since 2011, "Minecraft" has even contributed to a trend of users simply watching others play online.

  • MAN:

    Why did I just do that?

  • HARI SREENIVASAN:

    Now it's being widely reported that Microsoft is in talks to buy Mojang for more than $2 billion. The deal isn't a certainty.

    Markus Persson, who came up with "Minecraft," has stressed the importance of smaller independent developers like Mojang.

  • MARKUS PERSSON, Game Developer, Mojang:

    If you get a game from a big publisher, you kind of expect it to be something different, where, on the other hand, because the indy scene has grown so much and you kind of know where that is, you look at it with different eyes. And you can actually explore new game ideas and concepts and even styles, which is really cool.

  • HARI SREENIVASAN:

    Players already can buy "Minecraft" on Microsoft Xbox system. But a merger could secure the game for all its devices, including the Windows phone, and exclude the game from being on other platforms.

    The highly profitable gaming industry has also attracted other big names. Last month, online shopping giant Amazon said it's buying Twitch, a live video streaming service for gamers, for nearly $1 billion.

    And earlier this year, Facebook bought virtual reality company Oculus for $2 billion.

    For more on what all this might mean for Microsoft and for the gaming world, I'm joined by Stephen Totilo. He's editor and chief of gaming site Kotaku.

    So, what is it about "Minecraft" that is so special?

  • STEPHEN TOTILO, Kotaku:

    "Minecraft" is essentially this generation's "Super Mario Bros." It's the game every kid is playing or has played. They love — they dress up as the characters in "Minecraft" and what have you.

    It's ubiquitous. It's on every platform you can think of. And it's not just a video game. But think of it — especially if you don't play video games and you don't know "Minecraft," think about it as virtual LEGOs. It's a series of virtual bricks or a batch of virtual bricks and you can build them into anything you think of. And that's who a lot of people use it.

  • HARI SREENIVASAN:

    It's not just a person — first-person shooter when you're running around and killing people? And it's actually — the graphics are kind of blocky and they are not really extravagant.

  • STEPHEN TOTILO:

    Right.

    It actually is not what you would think of if you think of video games, and especially if you're horrified by video games and worry that they're all about violence and killing things. This is a game that does have a mode where you can go through and fight monsters and what have you.

    But most people use it and get excited about it as just the thing where they can play around and build anything they can think of. And you can go online and you can see people have made castles and spaceships and working calculators. They recreate "Game of Thrones" cities in it. It's quite amazing.

  • HARI SREENIVASAN:

    OK. So, $2 billion, that's — if this is the price that Microsoft is willing to pay, developers have been approached previous — by previous buyers and they haven't sold. Why not?

  • STEPHEN TOTILO:

    Well, we will see if this deal actually goes through, but it's interesting because Mojang, the company that made it, it's just a very small indy studio. It's in Sweden.

    "Minecraft" is made by one guy named Markus Persson. He's since handed off development to some other people in his studio he's brought along. And they have expanded.

    But it's been a small indy shop. And Markus — he's known as Notch. He's a very opinionated guy and he's spoken about his suspicion of what various corporations are doing. He has worked with some of them quite productively as well. But he seemed like an independent guy that you wouldn't expect them to sell.

  • HARI SREENIVASAN:

    And so we have also seen these kind of other moves in the industry right now, where you see a little bit more of the traditional players. Now Amazon is a big company and not necessarily the small upstart.

  • STEPHEN TOTILO:

    Right.

  • HARI SREENIVASAN:

    What do they get out of buying something like Twitch and what does it say about gaming overall now?

  • STEPHEN TOTILO:

    You're not seeing — you're not really — you're not really seeing headlines about big mergers of traditional video game companies.

    What you're seeing is an Amazon or before them a Google trying to buy Twitch, which is a service where you watch people play video games. You see Facebook spending on buying Oculus, which is about virtual reality. Yes, it could be about video games. But it can also be about medicine, and teleconferencing, and education.

    Similarly, if you think about "Minecraft," it too — it is not just a video game. As I was saying, it's virtual building blocks. It's something that people can use for education, productivity and creativity. So I think what we're not seeing is no so much an interest just in purely acquiring a video game or a video game studio, but acquiring a technology that could be used for games, but could be used for a lot of other broader applications as well.

  • HARI SREENIVASAN:

    When did this happen that it was interesting to watch other people play video games?

  • STEPHEN TOTILO:

    I think everybody at some point has watched — you were at the arcade and watched somebody play Pac-Man and go for the high scores. So there's some appeal to watching somebody perform, as you would find it exciting to watch somebody playing sports. We all watch sports, or at least many of us do.

    But Twitch is — if we're talking about Twitch in particular, it's also something interactive. People talk about what's happening in a chat window. That often becomes its own sort of social experience, and certain Twitch broadcast, you have people playing games, reading the comments and then changing what they're doing. It's an interactive broadcast, basically.

  • HARI SREENIVASAN:

    And then what about this merger — or, I should say, this acquisition by Facebook of Oculus. They make these big V.R. headset goggles. Is that changing the face of gaming?

  • STEPHEN TOTILO:

    The jury is still out on virtual reality. People have been trying to perfect virtual reality for a long time.

    Any — every decade and every generation has had their dreamers who think they have figured out how to put us into a new virtual space. Oculus is very impressive. I have put the headset on. It does look like you're in another world.

    The immersion can break. If you look down to see if your legs are moving, the virtual legs don't move the way your real legs move. I think Facebook sees this a way maybe for gaming, but maybe just for how we interact with each other. We're going to put the headsets on. I won't have to be in the studio with you.

  • HARI SREENIVASAN:

    Right. How do Facebook or Amazon or maybe Microsoft make money from spending all this other money on these platforms?

  • STEPHEN TOTILO:

    Well, it's questionable whether or not Oculus can make the money back that Facebook would be spending, is going to spending on it, or Twitch.

    But "Minecraft," it's a money machine. "Minecraft" has sold 16 million copies alone just on the P.C. and the Mac in the few years that it's been out. It's one of the top games on iPhone, on Android. It's on every platform you can think of.

    People pay to play "Minecraft." So, that's a very traditional way of making money. Is Microsoft's price too high? Are they paying too much? We will see. But if you're buying virtual LEGOs, there's a lot you can do with that.

  • HARI SREENIVASAN:

    And so are video games more profitable on the aggregate than movies are?

  • STEPHEN TOTILO:

    People go back and forth.

    They look at the different statistics. The gaming industry likes to sort of puff up its chest and say, we make better money than the box office for movies, but they don't count DVD sales and what have you. You really could argue it any way, depending on whether you're a proponent of one industry or the other.

    But it's clear that the video game industry is a healthy, growing industry that more and more is also open to a more diverse set of creators. I think one of the things that gets lost is, we talk about these blockbuster acquisitions, but we don't really talk as much about the fact that more and more people of more types, more men, more women, more people of color, more people of different sexualities and backgrounds, they're all getting to make games, because it's easier than ever for everybody to make games.

    And so we're seeing more diverse creations. I don't know that any big studio would have green-lit "Minecraft." It just — it doesn't look like a hit modern video game. You said yourself the graphics aren't super impressive.

  • HARI SREENIVASAN:

    Right.

  • STEPHEN TOTILO:

    And yet we have seen its appeal shows that it was a great idea. And so thank goodness one guy in Stockholm was able to make it.

  • HARI SREENIVASAN:

    All right, Stephen Totilo of Kotaku, thanks so much.

  • STEPHEN TOTILO:

    Thank you.

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