Activision Blizzard: Blizzard's Niche over Activision's Mass Appeal - Part 1
A Tale of Two Studios
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The year 2022 started with Microsoft announcing the acquisition of Activision Blizzard (ATVI) for $69b. It would be the largest acquisition in Microsoft’s history as well as for the gaming industry if approved. It came on the cusp—some speculate ‘as a result’—of a tumultuous 2021 where a lawsuit of alleged sexual harassment, assault, and trauma was filed against the company by the state of California.
The bad inevitably arrive at the doorstep of many companies that started off well. The best of cultures have often disintegrated under bureaucracy, anarchy, and tyranny. With the impending acquisition, the bright chapter for Blizzard may be closing as it gets swallowed into the cash-rich belly of Microsoft.
With the possible disappearance of ATVI as an independent public company, I wanted to examine the inner workings of a gaming company and its culture. This will not be an examination into the last few years of sexual allegations. Instead, I want to examine the culture that gave birth to games I consider to be amazing feats of human creativity.
Why Blizzard?
In 2021, the top five games per the number of players playing at one time were:
Fortnite - 12.3m
League of Legends (LoL) - 8m
Crossfire - 8m
Roblox - 4m
Minecraft with 1.4m
None were made by ATVI. But with an acquisition price of $69b, it’s no slouch. ATVI’s 2020 revenue of $8.1b put it in fifth place behind Sony (the Playstation console giant), Tencent (owner of League of Legends and 40% of Fortnite), Nintendo, and Microsoft (Minecraft & Xbox).
ATVI’s games had their time in the sun. They are the studio with modern classics like Call of Duty (CoD) series, World of Warcraft (WoW), and Candy Crush. Those three games made up 76% of ATVI’s 2020 sales.
Each of the three games came from three separate studios that make up ATVI’s operations. CoD was developed by Activision, WoW by Blizzard, and Candy Crush by King.
ATVI was formed in 2008 as a merger between Activision and Blizzard with King joining the party in 2016. Both CoD and Candy Crush have boasted monthly active users (MAUs) beyond the 250m mark, rivaling the popular games today. However, they are not the kind of games with diehard fans with conventions, movies with characters transcending into realms outside the game itself.
Unlike most game studios, Blizzard was able to create games that went past the simple purpose of being a form of mass appealed entertainment. They made art that defined genres of games.
While most game studios doubled down on what worked, Blizzard continued to make something different. Even if you’ve never played games, you might’ve heard of some of their hits like Starcraft, Warcraft, WoW, Diablo, Overwatch, or HearthStone.
A Quick History
Blizzard Entertainment was founded in 1991 by three college friends: Michael Morhaime, Allen Adham, and Frank Pearce. It was originally named Silicon Synapse.
It went through the classic startup story. The founders maxed out credit cards and found ways to get interest-free loans by getting cash backs at grocery stores with their Discover cards. Then they got a $40k loan from their parents. They still had the loan in their bank account by the time they got acquired by Davidson & Associates in 1993.
Silicon and Synapse changed its name to Chaos Studios because it was misspelled too often to Silicone & Synapse—sometimes being mistaken for a breast implant business. But, another company had the Chaos name licensed. The co-founders hit the dictionary and went down from A and didn’t have to go past B when they hit Blizzard. They’ve been called Blizzard Entertainment as of 1994.
Blizzard released their series of genre-setting games during the next decade. It started with Warcraft in 1994, a real-time strategy (RTS) game that went through multiple iterations. They hit the RTS-nail on its head with the release of StarCraft in 1998. Starcraft became a global sensation with eSports leagues dedicated to it back in the early 2000s.
Diablo, an action role-playing game (ARPG), was released in 1997 with Diablo II coming out in 2002. They set the stage for Blizzard to explore the world of mass multiplayer online (MMO).
Using the IP from Warcraft, the less-popular RTS, they released the World of Warcraft in 2004. It became a mega success and the world’s largest Massively multiplayer online role-playing game (MMORPG). It introduced subscription as a way to play online and grossed $1b annually within a few years, hitting $9.7b in total grossed by 2017.
During this illustrious decade of game development, Blizzard changed ownership through multiple holding companies acquiring each other until Vivendi became the final owner. But most of Vivendi’s portfolio of gaming companies was struggling and in an attempt to rescue it, Blizzard merged with Activision, which had released CoD and GuitarHero by then.
Activision Blizzard was formed in 2008 as a public company under the leadership of Bobby Kotick, who is still the CEO of ATVI today. It was said that Kotick wanted to acquire Blizzard for a number of years and had been nurturing the relationship with the folks at Vivendi. He wanted to get his hands on the WoW MMORPG. A business he saw as a cash cow. Kotick had taken over Activision in 1991 and engineered a business that would aim to publish a hit game every year. I imagine the subscription and organic nature of WoW enticed Kotick’s business-minded outlook on games.
Since the merger, Blizzard launched sequels to their successes—Starcraft 2, Diablo III—and Hearthstone, which used the Warcraft series to create a turn-based online card game similar to Magic The Gathering, in 2014. They launched Heroes of the Storm in 2015, which was a multiplayer battle arena game similar to Dota and LoL, that didn’t do too well and finally saw some success with brand new IP in Overwatch, a multiplayer first-person shooter (FPS) like Counter Strike or CoD, in 2016.
Blizzard saw many of its leaders depart in the subsequent years of the merger and the release of their last IP in 2016. Michael Morhaime and Frank Pearce, two of the three co-founders, left in 2018 and 2019. Allen Adham was the first co-founder to leave in 2004 but returned in 2016. Ron Pardo, the Chief Creative Officer and lead designer for WoW and Starcraft, left in 2014. Chris Metzen, known as the author who created the Warcraft, Diablo, and StarCraft universe, left in 2016. The company these individuals fostered over the two-decade period from 1994 to 2014 is what intrigues me.