What Went Wrong at Blizzard Entertainment
7 min read
Over the past three years, as I worked on a book about the history of the video-game company Blizzard Entertainment, a disconcerting question kept popping into my head: Why does success seem so awful? Even typing that out feels almost anti-American, anathema to the ethos of hard work and ambition that has propelled so many of the great minds and ideas that have changed the world.
But Blizzard makes a good case for the modest achievement over the astronomical. Founded in Irvine, California, by two UCLA students named Allen Adham and Mike Morhaime, the company quickly became well respected and popular thanks to a series of breakout franchises such as StarCraft and Diablo. But everything changed in 2004 with the launch of World of Warcraft (or WoW), which became an online-gaming juggernaut that made billions of dollars. I started writing Play Nice because I wanted to examine the challenging relationship between Blizzard and the parent corporation that would eventually call the shots. After conducting interviews with more than 300 current and former Blizzard staff members, I found a tragic story—a cautionary tale about how the pursuit of endless growth and iteration can devastate a company, no matter how legendary its status.
When Blizzard was founded, the video-game industry had not yet become the $200 billion business it is today. The Super Nintendo console hadn’t arrived in America, and Tetris was still one of the hottest things going. But Adham and Morhaime saw the unique appeal of the medium. With games, you didn’t just watch things happen—you controlled them.
Adham and Morhaime started the company in 1991 with a little seed money from their families, some college-level programming knowledge, and a handful of artists and engineers. Within a decade, their games were critical and commercial hits, selling millions of copies and winning over players worldwide. None of these titles invented a genre, exactly—the original Warcraft and StarCraft followed strategy games such as Dune II and Herzog Zwei, while Diablo shared some DNA with games such as Rogue and Ultima—but Blizzard had a working formula. The company’s games were streamlined and approachable, in contrast with more arcane competitors that, especially in the early days of PC gaming, seemed to demand that players reference dense manuals at every turn. Yet Blizzard games also maintained enough complexity to separate amateur and expert players. Most anyone could play these games, much as anyone could pick up a bat and smack a baseball—but there are Little Leaguers and then there is Shohei Ohtani.
Crucially, each game contained modes that allowed people to compete or cooperate with one another, first via local networks and then, beginning with 1995’s Warcraft II, through the internet. Blizzard’s success was tied to the rise of the web, and it even developed its own platform, Battle.net, that allowed customers to play online for free (an unusual move at the time). This was a bold approach back when fewer than 10 percent of Americans were regularly going online.
The company’s bet paid off wildly with the release of WoW, an online game that had not just multiplayer matches but a persistent universe, allowing players to inhabit a vivid fantasy realm full of goblins and centaurs that existed whether or not they were playing. Unlike Blizzard’s previous games, WoW required players to pay a $15 monthly fee to offset server costs, so Adham and Morhaime didn’t know what to expect ahead of release. They thought they might be lucky to hit 1 million subscribers. Instead, they reached 5 million within a year. Employees popped champagne, and colorful sports cars began dotting the parking lot as WoW’s designers and programmers received bonus checks that outpaced their salaries.
The company hired armies of developers and customer-service reps to keep up with the unprecedented demand, swelling from hundreds to thousands of employees. Within a few years, Blizzard had moved to a sprawling new campus, and its parent company had merged with a competitor, Activision, to become Activision Blizzard, the largest publicly traded company in gaming. By 2010, WoW had more than 12 million subscribers.
No company can scale like this without making changes along the way. For WoW to thrive, it would have to siphon talent from elsewhere. Players expected a never-ending stream of updates, so Blizzard moved staff from every other team to imagine new monsters and dungeons. Other projects were delayed or canceled as a result. WoW’s unprecedented growth also tore away at Blizzard’s culture. Staff on Team 2, the development unit behind the game, would snark to colleagues in other departments that they were paying for everyone else’s salaries.
Innovating, as the company had done so successfully for years after its founding, seemed to become impossible. Blizzard attempted to create a new hit, Titan, with an all-star team of developers. Mismanagement and creative paralysis plagued the team, but most of all, the team struggled with the pressure of trying to create a successor to one of the most lucrative games in history. Titan was stuffed full of so many ideas—the shooting and driving of Grand Theft Auto alongside the house-building of The Sims—that it wound up feeling unwieldy and incoherent. In the spring of 2013, after seven years of development and a cost of $80 million, Blizzard canceled the game.
To Bobby Kotick, the CEO of Blizzard’s corporate parent, this cancellation was a massive failure—not just a money drain but a wasted opportunity. Meanwhile, WoW was on the decline, losing subscribers every quarter, and an ambitious plan to release new expansions annually had not panned out. By 2016, the company had managed to release two more big hits: a digital card game called Hearthstone, based on the Warcraft universe, and a competitive shooting game, Overwatch, that was salvaged from Titan’s wreckage. But both projects were almost canceled along the way in favor of adding more staff to WoW. And they weren’t enough for Kotick, who watched Blizzard’s profits rise and fall every year and wanted to see more consistent growth. He pushed the company to hire a new chief financial officer, who hired a squad of M.B.A.s to make suggestions that sounded a whole lot like demands about boosting profits. In the early days, Blizzard’s philosophy had been that if they made great games, the money would follow; now the logic was flipped.
In October 2018, Morhaime resigned, writing, “I’ve decided it’s time for someone else to lead Blizzard Entertainment.” The pressure from Activision would only increase in the following years, leading to the departures of so many company veterans and leaders that the company stopped sending emails about them. Blizzard faced endless public-relations disasters, the cancellation of more projects, and frustration from Activision executives as its next two planned games, Diablo and Overwatch sequels, were delayed for years. In 2020, the company released its first bad game, a graphical remaster of an earlier Warcraft title, which was widely panned for its glitches and missing features.
Then things got even worse. In 2021, the state of California sued Activision Blizzard for sexual misconduct and discrimination in a complaint that largely focused on Blizzard. Current and former Blizzard staff spoke out on social media and with reporters about the harassment and discrimination they said they had faced. Blizzard replaced its president, fired or reprimanded dozens of employees, and even changed the names of characters in its games who had been named after alleged offenders. (The lawsuit was later settled for $54 million.) Microsoft agreed to purchase the disgraced game maker for $69 billion one year later.
Today, Blizzard is clearly not the company it once was. Although it retains millions of players and its games are successful, it has not released a new franchise in nearly a decade, and it is still reckoning with the reputational and institutional damage of the past few years. There were many factors, but you can draw a straight line from Blizzard’s present-day woes all the way back to the billions of dollars generated by WoW. If not for that sudden success and the attempts to supercharge growth, Blizzard would be a very different company today—perhaps one following a steadier, more sustainable path.
Other video-game makers have run into similar problems. Epic Games, once known for a variety of games and technological innovations, released Fortnite in 2017 and watched it turn into a cultural phenomenon; Epic grew exponentially and abandoned most other projects as that game exploded. Rockstar, the company behind Grand Theft Auto, has not released a new entry in the series since 2013 largely due to the billions of dollars generated by the previous game and its online component, which have sold 200 million copies but demanded extensive resources. The independent makers of smash hits such as Hollow Knight and Stardew Valley have struggled to deliver successors in a timely fashion, undoubtedly at least in part because of the creative pressures of surpassing art that millions of people loved.
Not everyone plays video games. But many people have felt the effects of enormous success changing something they once cherished, be it a rock band watering down its music to appeal to larger audiences or a search engine embracing AI garbage to appeal to insatiable investors. Why dedicate your resources to incubating new products when the old one makes so much money? Creative people often find themselves hoping for that one big hit to propel them on a course to greatness, but getting there can also mean losing your soul along the way. As one former Blizzard designer told me: “When millions turn into billions, everything changes.”
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