Microsoft will acquire the maker of the long-running hit game Minecraft for $2.5 billion as the company continues to invest in its Xbox gaming platform and looks to grab attention on mobile phones.
The technology company said it will buy Stockholm-based game maker Mojang in a deal expected to close in late 2014.
Minecraft, which lets users build in and explore a Lego-like virtual multiplayer world, has been downloaded 100 million times on PC alone since its launch in 2009. It is the most popular online game on Xbox, and the top paid app for Apple's iOS and Google's Android operating system in the U.S.
"Minecraft is more than a great game franchise it is an open world platform, driven by a vibrant community we care deeply about, and rich with new opportunities for that community and for Microsoft," said Microsoft CEO Satya Nadella.
Microsoft expects the acquisition to be break-even in fiscal 2015.
In a blog post, Mojang said its founders, Markus Persson, known as "Notch"; Carl Manneh; and Jakob Porsér are leaving the company.
Microsoft is primarily known for the Windows operating system and business software like its Microsoft Office suite. But this acquisition will help Microsoft expand its gaming division, which also includes game franchises such as the "Halo" shooter game and "Forza" racing game.
Microsoft bought Nokia's phone business for $7.3 billion in April and is also seeking to boost Microsoft's Windows Phone system, which has gained little traction against Apple's iPhones and Google's Android system. Microsoft CEO Satya Nadella has made mobile phones and Internet services priorities for the company as its traditional businesses - Windows and Office software installed on desktops - slow down or decline.
"We believe the acquisition of the ubiquitous Minecraft game (almost 54 million copies sold) strategically makes sense as Microsoft looks for ways to drive users toward its nascent mobile hardware business, where it can leverage and cross-sell a wide range of its higher-margin software (e.g., Office 365, Windows)," FBR Capital Markets analyst Daniel Ives said in a client note.Shares fell 26 cents to $46.44 in morning trading.