The rise and fall: how Blizzard lost its magic

It’s 2004: Blizzard releases «World of Warcraft». Reviews are overflowing with praise. Nevertheless, no one suspected that WoW would become the most successful MMO of all time. Blizzard could do no wrong. «Diablo 1» and 2, «Starcraft», «Warcraft 3»; every game that the American studio publishes is lauded hysterically by fans. The Blizzard brand guarantees quality. Few other studios enjoy this reputation of publishing near flawless games every time.

But in 2007, or rather 2008, an event followed which would permanently change a company irrevocably spoiled by success. Blizzard’s acquisition by Vivendi, which in turn merged with Activision into a single company a year later, set a new course for Blizzard. At first it’s barely noticeable, yet the problems soon begin piling up. Blizzard has now hit rock bottom with an ongoing lawsuit alleging widespread systemic abuse. How could it have come to this?

Two become one

Blizzard was created in the early 1990s through a merger of two games companies. In 1991, Michael Morhaime, Allen Adham and Frank Pearce founded Silicon & Synapse. Their early works include «Rock ’n’ Roll Racing» and «The Lost Vikings». To avoid constant confusion with chip manufacturers, the start-up rebrands itself as Chaos Studios two years later. However, due to legal disputes, even this name isn’t permanent. Simultaneously, after three years of independence, Chaos Studios is taken over by the software company Davidson & Associates. However, they don’t like the new Ogre Studios proposal either. So Adham flips through a dictionary until he finds a suitable name that is not yet trademarked. His random pick would become iconic: Blizzard.

Their first game developed under this new name is called «Warcraft: Orcs & Humans.» Its gameplay is based on Westwood’s strategy game «Dune 2». Followed by two successful sequels, Blizzard didn’t just lay the foundation for «World of Warcraft», but also for MOBAs as a whole, such as «DotA» and «League of Legends» thanks to an active modding scene.

The second part needed to create Blizzard was originally called Condor Games. The studio is founded in 1993 by David Brevik as well as brothers Erich and Max Schaefer. They begin their careers by producing commissioned console ports, such as «NFL Quarterback Club ’95» for the Game Boy. But not soon thereafter, they got on Blizzard’s radar with the demo for their first original game. A dark turn-based fantasy role-playing game called «Diablo». In 1996, Condor Games are acquired by Blizzard and renamed to Blizzard North. They retain their independence and can henceforth put all their energy into the development of «Diablo».

But before the game is released in 1997, beckoning a crowd of imitators, it undergoes a crucial change. Inspired by tactical games such as «Xcom», «Diablo» wasn’t originally planned to be a real-time action game. The new owners are intrigued by the concept, but for them it’s still clear that the game has to be in real time. That’s what their own experience with «Warcraft» showed them. There, all the best moments come when you have to make quick decisions under pressure.

So Brevik reluctantly gets to work. That’s before he learns that he only has to shorten the time in which actions are executed to fulfil this new concept. With this realisation, he manages to pump out a new version in just a few hours. In the book «Stay awhile and Listen» by David L. Craddock, the developer states, «I remember it like it was yesterday. I clicked on a monster. The character ran over, smashed the skeleton and it fell to the ground. Oh my God, this is incredible!» At that moment he knew: «Diablo» would be a sensation.

The gold standard among PC games

In the nineties, the name Blizzard is synonymous with first-class PC games. 1994’s «Warcraft» is followed by «Diablo» in 1997 and «Starcraft» a year later. This real-time sci-fi strategy game leaves a lasting impact. The saga, detailing a three-front war between Terrans, Zerg and Protoss, ensured long-lasting success and an active esports scene to this day, especially thanks to the multiplayer mode.

All this was only made possible with Battle.net. A free online service that allows gamers to play with or against each other. It was launched with «Diablo» in 1997, and for many it was the monster slaughtering game’s real highlight. Instead of exploring the dark dungeons alone, you could now challenge the Lord of Hell as a group.

But Battle.net didn’t really take off until 2000 with the launch of Diablo 2. Finally, there were dedicated servers. With them you were able to use the same character both online and locally. This gave the already highly praised successor a further boost.

In 2002, as real-time strategy games were falling behind, Blizzard bucked the trend with its next slam dunk, «Warcraft III: Reign of Chaos.» Its «The Frozen Throne» expansion proved to be particularly popular. However, the events detailed within its story would be followed by the studio’s biggest project to date: «World of Warcraft». An epic MMO set in the Warcraft universe, bringing together thousands of players on shared servers.

«World of Warcraft» launched in 2004, taking the world by storm. Millions sought to explore the world of Azeroth as an Orc, Dwarf or Undead. With the game, Blizzard finally reached the mainstream. Stars such as Vin Diesel, Mila Kunis or Dave Chappelle publicly admitted their WoW addiction. In 2010, its most successful year to date, WoW had 12 million active users. Although it called forth a huge wave of imitators, no other MMO could break this record.

«Diablo,» «Starcraft» and «World of Warcraft» were similar in one crucial way: they didn’t blindly follow an existing trend. Blizzard always had its own pace and approach when designing games. A recipe rewarded by success over and over again. However, this reputation as an infallible studio also has its downsides. As would come to light years later, this success fed into a rock star mentality among many long-serving developers, slowly poisoning the climate within the company.

Blizzard North dissolves

Before «World of Warcraft» rose to become the all-dominating gaming colossus, Blizzard, or more precisely Blizzard North, the developers of «Diablo», had their first big shake-up. Since being founded, the company had changed hands several times. The most decisive trade, however, might have been the takeover by Vivendi, or Activision respectively. Vivendi’s work began as early as 1998. Blizzard was owned by Sierra at the time, who were being acquired by French publisher Havas, which in turn was part of Vivendi.

Vivendi’s increasing influence led to conflicts of interest, especially at Blizzard North. In 2003, around 30 employees left the company as a result, including founder David Brevik and the Schaefer brothers. They disliked the empire Blizzard had turned into, no longer wanting to dance to the tune of shareholders. Two years later, Vivendi stitched together the remnants of Blizzard North with Blizzard South to form Blizzard Entertainment. One of the main motivators for this move was the unsatisfactory direction in which «Diablo 3» was headed. This marked the end of the former Condor Studios.

The first misstep

The success of «World of Warcraft» aroused the interest of Bobby Kotick. Activision’s CEO was busily trying to save his company from bankruptcy in 2006. Today’s hit «Call of Duty» wouldn’t achieve its breakthrough until 2007 with «Modern Warfare». So the infinite-money glitch that was «World of Warcraft», which at the time was bringing in $1.1 billion a year in subscription revenue, was just what he needed. However, Vivendi was also aware of this, which is why they only agreed to the merger with Activision as long as they retained a majority of shares. Kotick accepted, and in 2008 the new joint company was christened as Activision Blizzard. Blizzard retained most of its autonomy and continued to provide its own CEO, Mike Morhaime. Years later, the studio still boasts its title as a separate entity alongside Activision and its sub-studios, with its own management structure and campus. They’re also spared from a strict release cycle as opposed to «Call of Duty» – for now.

This way, Blizzard could release three «World of Warcraft» expansions at its own pace, as well as the first part of the «Starcraft 2» trilogy, and finally the hotly anticipated «Diablo 3» on May 15, 2012. Expectations were huge, and players all over the world jumped head first into the battle of clicks – only to be kicked out again by «Error 37». In the game’s first few days, this error message was omnipresent, keeping thousands of players from being able to enjoy the Action RPG. Even worse, however, was the auction house, where loot could be bought and sold for real money. This filled Activision Blizzard’s coffers, while doing considerable damage to the game’s balancing. Endgame content was also practically non-existent at launch.

Despite a bumpy start, «Diablo 3» developed into a popular and extremely well-liked game through the years. In 2014, the real-money auction house was closed, and an all-round popular add-on was released in «Reaper of Souls». But when it came to tackling the second planned add-on, management got in the way: «You’ve finished Reaper of Souls, it’s really good. But we think the best thing for the IP is to move to Diablo IV in whatever form that’ll be,» a team member recalled management saying in an interview with Kotaku. «The overall sense on the team, at least in my impression, was that there was a vote of no confidence from the executives. They thought Diablo III was a giant fuck-up,» another person is quoted as saying.

Regardless of the final product, the launch version of «Diablo 3» left a first stain on Blizzard’s hitherto white vest – at least in the public eye. A second, much larger one would cause less of a stir. Just one year after the release of «Diablo 3», Blizzard’s most ambitious project to date was quietly discontinued. Project Titan was supposed to be a new sci-fi MMO that combined «The Sims», «Left 4 Dead» and «Team Fortress». Work on it began back in 2007. Six years later, the plug was pulled on the project after a lengthy development period. It was the first real misstep in Blizzard’s career. Huge amounts of time and money were put into the project, and as its existence was already confirmed by the company in 2008, many people also knew about it.

The scars left by Project Titan haven’t fully healed to this day. For example, the announcement of «Diablo 4» has been postponed several times in fear of another disaster, reports industry insider Jason Schreier. The fourth part in the hellish action RPG series already went through a major reboot. Even though the ghost of Project Titan hangs over developers’ heads like the sword of Damocles, there’s also something good that comes from it: «Overwatch» is created from the remains.

Activision steps on the gas

But before Blizzard could set off the next genre revolution with «Overwatch», another development caused momentous changes. In 2013, Activision acquired the remaining Vivendi shares. With complete control, Kotick started installing his lieutenants at Blizzard, Schreier states in a tweet. Independence is limited and the release cadence increased. The irregularity with which Blizzard releases games and expansions is a thorn in Activision’s side.

In 2014, Blizzard released «Hearthstone», ushering in the age of card games that continues to this day. It’s their first game to be released on mobile platforms as well.

The next title, «Heroes of the Storm», follows one year later. It’s Blizzard’s answer to «DotA» and «League of Legends», featuring heroes and creatures from its own universe. Despite positive feedback, the game never achieves a big breakthrough. In 2018, Blizzard surprisingly announces that it will stop supporting the game’s esports scene. The development team is drastically cut and assigned to other projects. Even though «Heroes of the Storm» is still played today, that decision marked the de facto end of the game.

Blizzard has had much greater success with «Overwatch». The game that emerged from the ashes of Project Titan once again helped the studio enter new territory. Multiplayer shooters weren’t really booming in 2016, and yet Blizzard managed to pull off another surprise hit. The colourful roster of heroes and the dynamic 6v6 matches were a resounding success. The hero-shooter genre was born. With Activision Blizzard as its driving force, «Overwatch» became one of the most popular e-sports titles on the market.

However, even the most beautiful laurels cannot hide the fact that Blizzard hasn’t released a new game since «Overwatch». The company has put out expansions, remasters and three game announcements since 2016, nothing more. The result: since 2018, Activision has been increasing pressure to cut costs and publish more games. A veteran had this to say in an interview with Kotaku: «Finance in general in Blizzard has been one of these invisible functions that’s there, but doesn’t have a say. Now they’re suddenly in meetings.»

2018 marked the end of another era. Founder and CEO Mike Morhaime was fed up with Kotick’s increasing meddling and announced he would be leaving the company after 28 years. Together with other Blizzard veterans, he founded a new studio called Dreamhaven a short while later. He was succeeded by J. Allen Brack. And just one year after Morhaime’s departure, Activision Blizzard laid off nearly 800 employees. A few months earlier, Kotick called 2018 the most successful year yet for Activision Blizzard.

Diablo Immortal, Blitzchung and «Warcraft 3»

But the straw that finally broke the camel’s back was the announcement of Diablo Immortal at Blizzcon 2018. Instead of seeing the hotly anticipated «Diablo IV», fans were fobbed off with a mobile game produced in collaboration with the Chinese studio NetEase. The outcry was incredible. Blizzard, the studio that had earned a reputation for reinventing existing game systems, perfecting them when others had long since declared them dead. The studio that never tires of emphasising that they are first and foremost a PC developer. When a fan asked if the game would also be released for PC, the answer was a resounding no. Developer Wyatt Cheng then reacted to the following concert of boos with the now iconic: «Do you guys not have phones?» Of course they do, but fans didn’t travel to Blizzcon for mobile games. However, the game isn’t intended for them at all. The focus is almost wholly on the lucrative Chinese market. Blizzard’s next misstep shows just how important this is.

2019 featured mass protests in Hong Kong against China’s increasing influence. The protests were violently put down by the authorities. At the same time, Hong Kong native Ng Wai Chung, better known as Blitzchung, was participating in Hearthstone Grandmasters. He used the interview following his victory to express his support for the resistance movement. No sooner had he uttered the phrase: «Liberate Hong Kong, revolution of our times,» was the livestream interrupted. Blizzard not only banned Blitzchung from the tournament, but also confiscated his prize money and banned him for a year. While they support freedom of expression, they apparently don’t during a tournament. However, J. Allen Brack later reduced the ban to half a year and granted Blitzchung his prize money. However, his statement that «our relationships in China had no influence on our decision» doesn’t seem credible.

The most recent misstep that is still fresh in the minds of many gamers is called «Warcraft 3: Reforged». It was supposed to be a lavish remaster of the almost 20-year-old «Warcraft 3». However, Blizzard disappointed its fans once again. Not only were many promised features missing from the game released in January 2020, countless bugs plagued the title at launch. Worst of all, however, was the overhauled multiplayer portion, which made the original version unplayable and forced all players to update. Fans felt cheated by Blizzard. Even a total refund wouldn’t change this.

According to research by Bloomberg, the reason for this disastrous remaster was «mismanagement and financial pressures». Activision reportedly pushed Blizzard to cut costs and prioritise bigger titles.

The abuse scandal

However, we only found out how truly rotten Activision Blizzard had become in the last few weeks. Earlier reports of wrongdoing within the company have been quite literally flooded by new allegations and accusations. They were triggered by a two-year investigation from the California Department of Fair Employment and Housing that ended in a lawsuit. It states that sexual harassment, unwanted advances and groping are common within the company. Women are also paid less and assigned inferior work, the study continues. Complaints to both HR and then-President J. Allen Brack had been ignored, it says. The atmosphere resembles that of a fraternity.

As a result, numerous high-ranking members have already left the company. This includes Brack, the President; Jesse Meschuk, head of HR; Luis Barriga, game director on Diablo IV; Jesse McCree, chief level designer on Diablo IV; and Jonathan LeCraft, level designer on «World of Warcraft». In addition, many major sponsors such as Coca-Cola, Kellogg, IBM and Pringles have jumped ship regarding the «Overwatch» esports league. The lawsuit represents the current low point of the former flagship studio.

Kotick grasps for power

Whether the current lawsuit will lead to any improvements is uncertain. Initial reactions from Activision Blizzard CEO Bobby Kotick aren’t positive. His statements were dismissed by staff as empty promises. Even for shareholders, the announced measures clearly don’t go far enough. The fact that an unqualified law firm, which previously worked on behalf of Activision Blizzard, will be responsible for the investigation is especially disliked.

The scandal might be fine for Kotick, though, as it allows him to increase his influence on Blizzard. This is already clearly reflected in who the highest-ranking Blizzard employee is. While Mike Morhaime was still officially CEO, J. Allen Brack’s title was still President. Even his successors Jen Oneal and Mike Ybarra are only being referred to as a leadership duo. The chances of Blizzard rising to former stardom under these conditions are slim. Kotick no doubt hopes that the issue will have been settled with a successful «Diablo IV» in the eyes of many gamers and shareholders. Let’s hope he’s wrong.