World Class Villains

I thought it was interesting to see that Minecraft has made over US$80m in revenue since launching in October 2010, but ‘only’ US$13.5m in earnings before taxes, interest, depreciation and amortisation (EBITDA). The overall revenue figure seems pretty easy to calculate – 5m paying downloads at a variety of different price points from €14.95 for pre-launch, €19.95 for “post-launch” – but the EBITDA seems pretty low on that figure.

(Gamesbrief wondered the same thing, which prompted me to write this post.)

There are no doubt a number of things that eat into the earnings figure – the unexpected success of Minecraft probably meant that operations weren’t optimised and probably cost more when things were bought in an effort to catch up, exchange rate issues / costs would take a bite out of the revenue, plus server and ongoing development costs, etc. – but the gap of US$66.5m between revenue and earnings is huge for what is meant to be an indie studio (even if a wildly successful one).

I’ve looked around for the original source of the FT.com blog’s info about Mojang’s filings, but haven’t been able to find it. It might be in those materials where that huge sum of money is going, or some explanation about the discrepancy (for instance, the US$80m figure is a currently conversion at today’s US / Swedish Krona exchange rate, which may not be completely accurate and I’d like to see the full figures).

In short, spending US$66.5m in 15 months is a hell of a cash burn rate. Especially when you consider the myth of Minecraft is that one person developed it at home in an initially part-time capacity. There shouldn’t be a lot of debts in that kind of development process… or at least the kind of debts that $US80m doesn’t fix very quickly.