Blizzard Entertainment – Weathering the digital transformation
Blizzard Entertainment, one of the big names in the gaming industry, has weathered the ever changing conditions of digital transformation in the gaming industry and has risen on top…..so far
Blizzard entertainment, creator of video games that are considered among the most iconic ever, such as Diablo, Warcraft, and Starcraft, has gone through many digital revolutions and has constantly risen to the top. Every game they have released beginning with Starcraft in 1998 has debuted as the #1 selling game [1]. Let us examine key moments in the digital world, including the personal computer revolution, the widespread use of the internet, and the move to mobile, and see how Blizzard has adapted to these changes and come up with games that keep gamers addicted.
Beginnings
Blizzard began as a small game developer in 1991 [2]. Back then they were producing games for the super Nintendo entertainment system. PCs are able to form networks together and have players play together in a “LAN party”, first popularized in 1993. Blizzard successfully rode that wave and released Warcraft, their first PC game, in 1994. Warcraft was a strategy game that could fully tap into the potential of the competitive gaming aspect enabled by LAN, generating the “hardcore gamer” category [3]. They continuously released other strategy games that cemented them as the leader in the category, but LAN was not the final battleground, the battle goes online.
The battle on the net
Blizzard released Diablo, their first game that could be played with other players online, in late 1996, along with Battle.net, the free online platform that makes it easier than ever for PC gamers around the world to play together via the internet [2]. Battle.net, along with their extremely well designed games simply allowed players to login to the system with a personal profile, search for matches, and chat with each other [4]. That was all battle.net did but it was simple and functional and fueled a colossal rise in online gaming. Again, they continued their dominance by releasing monumentally successful games that capitalize on the ever so popular online gaming aspect whilst continuously improving quality and introducing features that are appealing to gamers even without the online aspect.
In 2004, internet penetration was roughly 64% in the U.S [5]. The conditions were right for the biggest move in online gaming history. Blizzard’s released World of Warcraft (WoW), which would to become the highest grossing PC game in history, with over $8.5 Billion and still growing [6]. Unlike previous releases by Blizzard, WoW can only be played online. The game was known to be extremely addictive and immersive as players were able to live in a fantasy world complete with seemingly endless actions to do and real time interactions with millions of other players. WoW has to be purchased up front like previous games but players also have to pay a monthly subscription to play. Blizzard was able to see the effect of the digital transformation on home entertainment and catered to them with WoW. New installments of WoW are still being released in the present, though the amount of subscribers are much less than when it peaked at 12 Million in 2010 [7].
Going Mobile
The next evolution in gaming began when smartphones and app stores came to the public in 2007. The demographics of gamers and how they experience gaming both physically and behaviorally changed dramatically. Devices for mobile gaming is much more widespread, but the gaming software itself tends to be much less complex. The profit model for mobile games also changed dramatically as people are less likely to pay up front for downloads [8]. Blizzard released Hearthstone in 2014 as an online mobile card game based on their Warcraft franchise. Hearthstone is free to download but essentially charges users for better cards. Though slow to the market, they made sure their product was of high quality. Hearthstone has made over $500 Million and is one of the top 10 esports (3 total from Blizzard) [9].
Looking Forward
Blizzard is doing extremely well today, but who knows what digital transformations will take the gaming industry in the future. Company executives have stated that they will put more focus on esports, mobile gaming, and online community experience, but has no plans to pursue virtual reality in the short term [10]. Is that the right way to go? Or are they totally throwing away the future by ignoring VR?
Words: 707
To your point, gamers spend hours (if not days) playing their respective game. The world of intense gaming is built less on “on-demand” and more on an immersion experience. The mobile experience may be counterproductive to this fact and prevents players from getting immersed as they are limited by battery, wifi, and the fact that they are traveling. I think VR is the logical next step in this business and it will take game immersion even further and allow the gamer to not just play the game, but be in the game.
I think the shift you highlighted from traditional PC gaming to mobile will be a significant litmus test for all of the software and game developers like Blizzard who have been so successful in the PC model to date. It will be very telling to see just how Blizzard continues to adapt and evolve with the changing consumer landscape and how end users experience the games going forward. The move into mobile seemed inevitable and it will be very interesting to see just how much time and resources Blizzard allocates to mobile versus PC going forward. You raised a great point about VR, in that Blizzard could be forgoing significant first mover advantages by choosing not to develop games for this new platform. However, I’d be curious to see if they can be latecomers, like they did with mobile, and still design a high quality game for the new VR platform.
While it might take a few more years for VR to be a widely popular medium of gaming, I think Blizzard should note that it might take more capital expenditure and time to develop the technology and come up with related softwares. The first mover advantage might play a bigger role if some of the features are patented and difficult to be replicated by late movers.
On a different note, I think it might be worthwhile to build and develop online gaming communities and attract more users through tournaments or leagues that are easily accessible. Given the strong growth potential in global markets, such strategy could increase connectivity among users in different markets and further increase the much needed scale, allowing the company to achieve the network effect and fully realize the upside potential of its products.
Thank you, Nick, fascinating article. I think Blizzard has done an excellent job in the way they monetize their games. Specifically, in the past, the company rely more on the sales of the game itself, but today the game is free, and items are the way to monetize.
I am quite surprised by the fact that Blizzard chose to ignore VR. The gaming industry is one of the industries that could benefit the most of VR experience. Nintendo was able to leverage a relatively old technology to create a huge buzz with “PokemonGO.” I believe Blizzard can revolutionize the industry if it was able to create VR version of its classic game e.g., Diablo or World of Warcraft.
Fascinating article! It is very interesting how Blizzard has positioned itself through the years as a leader in the gaming industry with a tremendous focus on product quality and design, while not undermining the user’s immersive experience. Therefore, for me it makes perfect sense that they’re not getting into VR just yet, the technology is not ready to support the hyper-realistic graphics that their games require and may not be ready for a couple of years still. It is also very innovative the way they have been maximizing revenue and adapting to the new growing categories of gaming, such as mobile. Nevertheless, the future in mobile and VR may bring these two platforms together at some point, so it is a risky move to be unapologetically uninterested in VR today.