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Comment by Guvante | Hacker News Reader

It is important to remember that PV calculations are pretty easy to do, and help bring the FU money back to reality.

For instance if Minecraft sells 10,000 copies a day (as someone else said) that is $100m a year. Assuming other platforms add up to the same that is $200m a year. At an 8% interest rate that is worth $2.5 billion assuming it continues forever. It is worth $1.3 billion if it only happens for 10 years.

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Hey, I said that with the 10,000 (PC) copies. (With the 10,000 number that hasn’t changed for years I mostly wanted to make clear that, while not exactly growing, Mojang doesn’t seem to shrink, either.)

But Mojang’s revenue and profit are public: http://www.polygon.com/2014/3/20/5531046/minecraft-mojang-pr...

$322M revenue, $128M profit. However, I’m not sure whether that profit number is the correct one to assess the value of the company and IP.

If I understand this potential acquisition correctly, Notch seems to want to sell everything (company and IP). I think the company is currently set up so that Mojang pays Notch licensing fees for the Minecraft IP. That could potentially be a large part of their revenue. If Microsoft acquires company and IP they obviously don’t have to pay those licensing fees anymore.

Mojang is only a 40 person company, labour has to be their by far biggest cost, and I really don’t think a 40 person software company (that doesn’t really do any marketing, by the way) costs nearly $200M to run per year.

I didn't mean to say "this is how you value Mojang". I just meant to say "here is how you get numbers that make $2 billion not just FU money".

Determining the value of IP is incredibly complex and something I would love to avoid having to do.

Let's say their employees are paid $100k each per year (average). And let's say they cost $50k work workplace/perks/... each.

Then let's say they lose 10%-15% of revenue in licencing cost (apple, ms, google, xbox, and let's say some facebook/twitter campaigns and software).

So then you'd have $322m * 0.85 - 40 * $150k - 128m (notch's pay) = 139m profit.

That looks reasonably close on the money. So you'd expect net income to be about $265 million.

8% interest on present cash is high.

Anyhow, the easy rule of thumb for converting between income streams and present value is simply "multiply by 20". In rough numbers, it $1/year is worth $20.

How do you come up with the factor of 20? On a smaller scape, if you try to buy a website or an online-business (say, on Flippa), oftentimes the sales price is around 2-3x yearly income. For my own business, I'd love to see a factor of 20, but I can't see how anyone would offer that much money.

Consider the difference between income and profit. For the present value calculation, you would need to use the profit, not the revenue. (After all, once you take the payout, you don't have any expenses.)

Both 8% and 5% are fairly standard.

You chose one, I chose the other.

The much much bigger problem is how many years?

... and in a month a new game comes out and minecrafters realise this is what minecraft should have been all along ...

A few dozen "this is what minecraft" should have been games have come out in the last few years. Nothing has the staying power of Minecraft.

Eh, can you name one? There are several "Minecraft could have done this as well" games, I guess, but nothing really stands out as anything like a spiritual successor, or whatever. There's Terraria, but that's not quite the same either is it.

Well, that certainly goes in the "potential risks" section, but it hasn't happened yet, and it's been five years.

my mom bought me a stuffed animal from Walmart, and I know more people who play it on the xbox in real life... and I know at least 150 pc gamers personally through heading up VTC's gaming club. I'm pretty sure the business angle here is marketing leverage to sell more xboxes.

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