STOCKHOLM--Swedish computer games maker Mojang AB said net
income more than doubled last year, banking on the popularity of
cult classic "Minecraft" and eschewing the so-called freemium model
adopted by many of its bigger competitors.
Mojang raked in 816 million Swedish kronor ($128 million) last
year, up from 325 million kronor in 2012. Revenue soared 38% to
2.07 billion kronor, according to figures made available to The
Wall Street Journal. Mojang is a privately held company and will
soon publish its full financial statements with Swedish
regulators.
Those numbers pale in comparison to the jaw-dropping profit
reported recently by rivals King Digital Entertainment PLC and
Supercell Oy. But Mojang, a tiny developer based in Stockholm's hip
Södermalm district, achieved these results with fewer than 40
employees--King employs 665 people, and Supercell just under
140--and with a marquee game that is now five years old.
What sets Mojang apart from its competitors is that it charges
players a flat fee for downloading the game--a pricey $27 per
download on a PC or $20 for a console-based gaming device, and $7
for the mobile version.
In contrast, rivals King, Supercell and Zynga Inc. rely on the
"freemium" model--they offer their games free for downloading onto
computer screens or mobile devices, and only charge players for
in-game features like topping up power or eliminating waiting
times. That strategy leans heavily on a relatively small number of
high-paying players to boost revenue.
"Minecraft" was among the top-10 grossing games offered by the
mobile apps stores of Apple Inc., Google Inc. and Amazon.com Inc.
But it was the only one in the group that charged for downloading,
according to Distimo, an Amsterdam-based apps analytics firm.
"Mojang proves that it is possible to be continuously successful
with a paid game app," Distimo analysts wrote in a recent
report.
The popularity of "Minecraft" rests in large part on the game's
open-ended possibilities. Often described as a sort of online Lego
set, "Minecraft" allows players to use virtual material to
construct everything from buildings and cities to starships.
Players can also team up online for joint projects. The game's
staying power has outlasted many other competitors.
"Usually with games, you would start to expect a decline after
the first year since launch," said Mojang Chief Executive Carl
Manneh in an interview. "That's never really happened for us."
Markus Persson, a burly and bearded former King developer,
created "Minecraft" in 2009. He formed Mojang a year later with his
friend and one-time King colleague Jakob Porsér. The two own the
company with Mr. Manneh, the CEO. It offers no stock options for
employees, and Mojang executives have repeatedly said they don't
need to list shares. They have turned down several acquisition
offers and funding overtures.
Mr. Persson holds the intellectual rights to "Minecraft." The
license fees Mojang pays to Mr. Persson for "Minecraft" represents
the largest chunk of the company's costs. Last year, Mojang paid
821 million kronor in licensing fees to a separate company owned by
Mr. Persson, according to Mojang Chief Financial Officer Karin
Severinson.
The success of "Minecraft" has always been an outlier in the
global gaming business. Computer game developers have long relied
on massive marketing campaigns and large distribution network for
sales.
Mr. Persson, by contrast, eschewed marketing, launching his game
before it was even finished in 2009. Mr. Persson bet on
word-of-mouth and online recommendations from other gamers, which
spread rapidly on Internet forums and social media in the wake of
its unassuming release.
In its first years of existence, "Minecraft" wasn't distributed
by any of the big-name game publishers, like Electronic Arts Inc.
and Activision Blizzard Inc. and wasn't supported by the main
gaming consoles, like Microsoft Corp.'s Xbox and Sony Corp.'s
PlayStation. Instead, gamers had to download the game--and pay the
download fee--through the rudimentary Minecraft.net Web page.
As the game's popularity took off, Mojang embraced more
traditional channels, releasing a version for the Xbox and
PlayStation, as well as apps for the iPhone and Google's
Android.
Last year, 38% of the company's revenue came from sales of the
PC version of "Minecraft," while the versions for the Xbox 360 and
PlayStation 3 accounted for 30% of sales, Ms. Severinson said.
Roughly a quarter of revenue stemmed from mobile. The rest came
from "Scrolls," a strategy card-trading game, as well as
merchandise sales.
Mojang has struck merchandising deals with the likes of Lego
A/S, and is currently negotiating with Warner Bros. Entertainment
Inc. to bring the game to the big screen. The company has a few
other game projects, Mr. Manneh said, but executives feel no urge
to rush into any new ventures.
"Financially speaking, we have no pressure whatsoever to rush
into any new projects," he said. "Besides, we have no outside
owners that require us to reach any particular goals."
Write to Sven Grundberg at sven.grundberg@wsj.com and Jens
Hansegard at jens.hansegard@wsj.com
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