how-does-minecraft-make-money

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. 

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:

  1. Recurring subscription ($7.99/month) – 20% cheaper than manually purchasing a 30-day subscription each month.
  2. For 30 days of access, there is a one-time charge of $9.99.
  3. For 90 days of access, there is a one-time charge of $26.99.
  4. 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.

Read also: Inside The Epic Games Empire, How Much Money Has Fortnite Made?Gaming IndustryEA Sports Business ModelHow Does Discord Make Money, The Free-To-Play Business Model, The Nintendo Business Model, How Does Unity Work And Make Money, Roblox Business Model.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"