How Does Minecraft Make Money?

Minecraft is a sandbox video game affording players a great degree of creativity and freedom in choosing how to play the game. Originally known as Cave Game, Minecraft was created by Swedish programmer Markus Persson. The first edition of Minecraft was released in May 2009 on TIGSource, a forum for independent game developers. In 2014, Minecraft was purchased by Microsoft for $2.5 billion. Over the years, the revenue generation of Minecraft has been straightforward. For a one-time fee, users received lifetime updates for free.

Business Model Element	Analysis	Implications	Examples
Value Proposition	Minecraft’s value proposition includes: – Creativity and Exploration: Offering a limitless open-world environment for players to explore, build, and create anything they can imagine. – Multiplayer Experience: Allowing players to connect and collaborate with others in shared game worlds. – Freedom and Customization: Providing tools for extensive modification, known as “mods,” that allow players to customize their gameplay experience. – Educational Benefits: Supporting learning through Minecraft: Education Edition, designed for classroom use. Minecraft offers a unique platform for creativity, collaboration, and exploration, with educational potential.	Attracts players seeking a sandbox game with creative freedom. Fosters a sense of community and collaboration through multiplayer. Encourages player-driven innovation and customization. Expands into the education sector with Minecraft: Education Edition. Establishes a strong value proposition in the gaming industry.	– Open-world sandbox for creative freedom. – Multiplayer experience for collaboration. – Modding community for customization. – Minecraft: Education Edition for learning.
Customer Segments	Minecraft serves the following customer segments: 1. Gamers and Enthusiasts: Catering to gamers of all ages who enjoy open-world exploration and creativity. 2. Educational Institutions: Offering Minecraft: Education Edition to schools and educators for educational purposes. 3. Game Developers: Providing opportunities for game developers to create and sell custom mods and content. 4. Content Creators: Attracting YouTubers, streamers, and content creators who produce Minecraft-related content. Minecraft targets a diverse range of gamers, educators, developers, and content creators.	Attracts gamers looking for open-world creativity and exploration. Expands into educational institutions for classroom use. Provides opportunities for game developers and content creators. Builds a community of players, educators, and creators around the platform. Diversifies its user base across different segments.	– Gamers and gaming enthusiasts of all ages. – Educational institutions and teachers. – Game developers creating custom content. – Content creators producing Minecraft-related content.
Distribution Strategy	Minecraft’s distribution strategy includes: – Digital Platforms: Offering the game on various digital platforms, including PC, consoles, mobile devices, and VR. – Online Stores: Selling the game through online stores such as the Microsoft Store and official Minecraft website. – Licensing: Partnering with other companies for merchandise and licensing deals, expanding the brand’s reach. – Community Engagement: Maintaining an active online community of players, content creators, and modders. Minecraft employs digital platforms, online stores, licensing, and community engagement to distribute its game and related products.	Provides accessibility through multiple digital platforms. Sells the game through official online stores and channels. Expands brand presence through licensing and merchandise. Engages and fosters a dedicated community of players and creators. Implements a comprehensive distribution strategy across various channels.	– Availability on PC, consoles, mobile, and VR platforms. – Sales through online stores and the Microsoft Store. – Licensing partnerships for merchandise. – Active online community of players and creators.
Revenue Streams	Minecraft generates revenue through the following channels: 1. Game Sales: Earning revenue from the sale of the game across various platforms. 2. Microtransactions: Offering in-game purchases, such as skins, texture packs, and additional content. 3. Licensing and Merchandise: Partnering with companies for merchandise and licensing deals. 4. Minecraft Realms: Offering subscription-based multiplayer servers for players. Minecraft diversifies its income sources through game sales, microtransactions, licensing, merchandise, and subscription services.	Earns income from game sales across multiple platforms. Generates revenue through in-game microtransactions. Benefits from licensing and merchandise partnerships. Offers subscription-based multiplayer servers for recurring revenue. Diversifies its revenue streams within the gaming industry.	– Revenue from game sales on various platforms. – Income from in-game microtransactions. – Licensing and merchandise partnerships. – Subscription-based Minecraft Realms servers.
Marketing Strategy	Minecraft’s marketing strategy involves: – Community Engagement: Encouraging players to share their creations and experiences online through social media, YouTube, and streaming platforms. – Content Creators: Collaborating with YouTubers, streamers, and content creators who produce Minecraft content. – Educational Partnerships: Promoting Minecraft: Education Edition to educators and schools. – Updates and Events: Announcing updates, events, and features to keep players engaged. Minecraft relies on community engagement, content creators, educational partnerships, and updates to promote its platform.	Leverages the Minecraft community for organic promotion. Collaborates with content creators for visibility. Expands into education through partnerships with educators. Keeps players engaged with regular updates and events. Implements a multifaceted marketing strategy aligned with its user base.	– User-generated content shared on social media. – Collaborations with YouTubers and streamers. – Promotions of Minecraft: Education Edition. – Announcements of game updates and events.
Organization Structure	Minecraft’s organizational structure includes: – Development Team: Comprising game developers, designers, and programmers responsible for game updates and features. – Marketing Team: Focusing on marketing campaigns, community engagement, and collaborations. – Partnership Team: Handling partnerships with educational institutions, content creators, and merchandise companies. – Customer Support Team: Providing assistance and support to players. Minecraft maintains an organized structure to support its game development, marketing, partnerships, and customer support efforts.	Led by a development team responsible for game updates. Employs a marketing team for promotion and engagement. Manages partnerships with educational institutions and content creators. Offers customer support for player assistance. Maintains an organized structure aligned with its business model and community.	– Development team for game updates and features. – Marketing team for promotional efforts. – Partnership team for collaborations. – Customer support team for player assistance.

Table of Contents

History of Minecraft

Minecraft is a sandbox video game affording players a great degree of creativity and freedom in choosing how to play the game.

Originally known as Cave Game, Minecraft was created by Swedish programmer Markus Persson.

Persson had previously worked at video game developers King and jAlbum, but preferred to develop games in his spare time to grow an independent gaming subculture.

One particular prototype he developed was Infiniminer, a block-based mining game and likely predecessor to Minecraft.

The first edition of Minecraft was released in May 2009 on TIGSource, a forum for independent game developers.

Over the next year or so, Persson refined the game using feedback from his peers.

Minecraft became increasingly popular after the so-called Alpha update in June 2010, causing Persson to quit his job and focus on the game full time.

He then founded the game development company Mojang Studios with former colleagues Carl Manneh and Jakob Porser.

Minecraft went through a phase of constant growth and calibration, adding new items, blocks, mobs, resources, and game mechanics.

In November 2011, the full version of Minecraft was released to immediate success. As the user base grew rapidly, Mojang continued to hire new developers in the background to grow the game.

This desire to constantly update and enhance the game is a characteristic of Minecraft to this day.

In 2014, Minecraft was purchased by Microsoft for $2.5 billion. The most recent figures show it generated $415 million in revenue in 2020 with over 130 million active monthly users.

Minecraft revenue generation

For many years, Mojang Studios had a simple revenue generation strategy. The company sold Minecraft for a one-time fee and then users received lifetime updates for free.

When Microsoft took over, the company faced the challenge of keeping Minecraft accessible for users on platforms it did not own.

It also had to keep the large and devoted user base engaged by maintaining a precedent of constant updates set by Persson.

Let’s take a brief look at how this is being achieved in practice.

Minecraft Marketplace

Minecraft Marketplace sells a range of game-enhancing features, including skin packs, texture packs, mash-up packs, mini-games, survival spawns, and adventure maps.

The service is available on any device running the Bedrock version of Minecraft.

These features are purchased with Minecraft coins which are available from the game store and kept in a secure virtual wallet.

While exact figures are difficult to source, Microsoft claims creators receive over 50% of each sale. The company collects the remainder, with around 30% attributed to app store processing fees.

In Q3 2012, revenue from marketplace sales amounted to $350 million from over 1 billion user downloads.

Multi-player functionality

For Realms in the Java Edition of Minecraft, players can pay to play with up to 10 of their friends, family, or colleagues at the same time.

There are four options here:

Recurring subscription ($7.99/month) – 20% cheaper than manually purchasing a 30-day subscription each month.
For 30 days of access, there is a one-time charge of $9.99.
For 90 days of access, there is a one-time charge of $26.99.
For 180 days of access, the one-time charge is $47.99.

Minecraft Shop

The Minecraft Shop sells a variety of Minecraft-branded merchandise for children and adults.

Some of the products available for sale include bedding, Lego sets, lamps, mood lights, t-shirts, and mugs.

Minecraft spin-off games are also available, including Minecraft Dungeons, Minecraft Earth, and Minecraft: Story Mode.

Key takeaways:

Minecraft is a sandbox video game created by Swedish programmer Markus Persson in 2009. Persson developed the framework for Minecraft in his spare time as a passionate proponent of the independent gaming subculture.
Minecraft Marketplace allows creators to sell a range of game-enhancing features, including skins, mash-ups, and adventure maps. Microsoft takes an unspecified fee for each sale, likely a combination of commissions and processing fees.
Minecraft offers a monthly or one-time subscription service for those who want to play the game with others. A range of merchandise is also available for sale in the Minecraft Shop.