ROI CASE : "MINECRAFT"

At the moment, it can be found in the world that Enterprise 2.0 helps companies to improve their value in the company such as marketing and sales and also improve communication between businesses and consumers. “While 72 percent of companies use social technologies in some way, very few are anywhere near to achieving the full potential benefit” (McKinsey, 2012). For instance, blogs, Facebooks, Instagram and YouTube used by companies to increase their profits. Consequently, ROI is important to measure how Social technology produce the benefit for company. Owing this, I would like to deliberate about the relationship among ROI and Minecraft Company case on this blog.

The Overview of Minecraft

Minecraft is a sandbox indie game. Minecraft is created by Markus Notch Persson as a Swedish programmer. Mojang is the developer and publisher for Minecraft. On 17 May 2009, Minecraft released for the first time on public. Nowadays, Minecraft is very famous as you can see in this video.

Minecraft popularity doesn’t seem to be fading. Mojang as a publisher has taken in "revenue" exceeding $80 million in their first 15 months since their launched the Game. The profit that the company got it is from Youtube. The game has no tutorial, but every player is able to check a great number of youtube videos players. This profit is approximately $13 million. Based on The Wall Street Journal Report, “Mojang as the developer of Minecraft, saw its profits more than double in 2013, when the studio earned 816 million Swedish kronor ($128 million)”

The Explanation of ROI

ROI stands for Return On Investment. According to Entrepreneur Encyclopedia, ROI is the most common profitability ratio consist of method with divide net profit by total assets. Moreover, “ROI is the earning power of assets measured as the ratio of the net income (profit less depreciation) to the average capital employed (or equity capital) in a company or project.” (Business Dictionary)

As ROI Calculation, I was not able to find a real or exactly details of the number. Owing this, this the assumptions of ROI calculation consists of:

GAIN FROM INVESTMENT	COST OF INVESTMENT
Increased Sales                         = 50% x $100.000 = $ 50.000	Software/Hardware   : $ 40.000
Sales from X-box version                                         = $  2.000	Training                         : $   5.000
Sales from iOS Version                                             = $  3.000	Marketing and Sales Tools :                  : $ 10.000
Sales from Android version                                    =  $  2.000
Sales from Playstation 3 and 4                               = $  5.000
Reductable cost from marketing and sales
(30% x $ 50.000)                                                       = $ 15.000
TOTAL:                               $ 77.000	TOTAL:      $55.000

ROI = ( 77.000 – 55.000 ) X 100 = 40 %

    55.000

The Benefits of ROI
 

"Intangible"

Social Media such as YouTube is a greater way for increase customer engagement and customer satisfaction. In addition, for players is easier to adapt the way of playing Minecraft from YouTube videos. Moreover, new information and skills in marketing techniques through social media could be adapted by employees.

"Tangible"

Social Media increased profit according on sales and marketing driven. Furthermore, the company saw a great number of revenue for them by social Media.

 
The Strength and the Weakness of ROI

ROI have a few strengths for this case such as reducing money or equity for marketing and sales necessary. Moreover, ROI is able to calculate the exactly number of profit and revenue as a tangible benefit clearly described. In addition, ROI is able to imprisonment intangible benefits as well.

On the other hand, Minecraft Company did not usage a few kinds of social technologies. This is a weakness of ROI from Minecraft Company.

 

-MEL-

Reference

Newman, A., Thomas, J., & Ebrary. (2009). Enterprise 2.0 implementation. New York: McGraw-Hill.