Issue 9

Why Blizzcon failed again

Delivered on 11 November 2018 by Justin Pyvis. About a 5 min read.

Activision Blizzard, the creators of popular gaming franchises such as Diablo, Warcraft, Starcraft and more recently Overwatch, held their annual BlizzCon event last week. For those unfamiliar, it’s essentially a big gathering of gamers that features Q&A panels with developers, announcements of new games (and playable demos), tournaments, and even costume and talent contests.

But this year’s event didn’t go down well with fans. At all. Instead of announcing a new game, Blizzard decided to use the platform to launch a mobile-only version of Diablo 3, dubbed Diablo Immortal. The team was promptly booed by the crowd, a rarity at these kinds of events.

Then it got worse.

Every YouTube video Blizzard uploaded to promote Diablo Immortal was instantly pummelled with downvotes, despite Blizzard’s attempts to purge negative commentsor simply relaunch the videos. A petitionappeared and quickly received over 40,000 signatories wanting to “Make Blizzard Great Again”, presumably by reducing its focus on Diablo Immortal. Activision Blizzard’s share price tanked.

I’m personally a big fan of the Diablo franchise, having played all three versions (and their expansions). It’s an action role-playing, much like World of Warcraft, except without the “massively” part. It means you can get the full experience without having to sink too much time or money into it. But will I play Diablo Immortal? No. But then again, I don’t play any games on my mobile phone. Most of the Diablo fans at BlizzCon probably feel similarly, hence the negative reaction. But that’s not the only reason the share price fell.

It’s not the first time.

This isn’t the first BlizzCon failure but it is the worst. Looking at Activision Blizzard’s share price in the two days following the BlizzCon weekend, it has fallen in all of the past 5 years. Indeed, BlizzCon was only really a success in its first three iterations, with investors left either ambivalent or disappointed every year since 2008.

My takeaway is that in the context of Blizzard’s development cycle, the timing of the Diablo Immortal announcement was poor. The last time it progressed one of its ‘core’ games - that is, released a new story-progressing game within its Diablo, Starcraft and Warcraft universe (excluding expansions) - was Diablo 3 back in 2012. Blizzard should have offered something else at BlizzCon. Investors were disappointed not because of Diablo Immortal, but because Diablo Immortal was practically all there was (the other ‘major’ announcement was a remastering of its popular real-time strategy game, Warcraft 3).

Diablo Immortal itself won’t perform as poorly in terms of revenue as the hardcore fanbase will have you think. But it should be considered complementary to the ‘core’ line of games, not the sole focus. Thinking that it would go down well at a big gathering of hardcore, PC-gaming fans such as BlizzCon was foolish and naïve.

BlizzCon is overhyped

There’s also the fact that Blizzard doesn’t really announce major titles at BlizzCon. Starcraft 2 was announced in May 2007, three months prior to BlizzCon. Diablo 3 was announced in June 2008, four months prior to BlizzCon. World of Warcraft was announced in September 2001, before BlizzCon even existed (and expansions aren’t usually announced at BlizzCon, either).

Essentially, Blizzard announces and releases games when it’s good and ready, not to line up with an arbitrary, pre-determined date in the calendar. That hasn’t stopped the faithful from attending, however, with the event sold out every year (the cheaper live streaming option attracts over 10 million viewers).

BlizzCon is a cash cow, a festival of sorts for people who prefer video games to, say, doing a lot of drugs and watching a giant wooden man burn. So while the event itself was underwhelming in terms of what was announced, that’s part and parcel at BlizzCon these days. A lacklustre BlizzCon isn’t going to break Blizzard, and Diablo Immortal will likely help the company in the long-run.

Mobile is the future.

The mobile gaming industry in 2017 accounted for nearly half of all global gaming revenue. Half!That’s huge, so it was only a matter of time before Blizzard, a gaming behemoth, decided to throw its hat into the ring. Allen Adham, executive producer and Blizzard co-founder, had the following to say about its decision to pursue Diablo Immortal:

“The way I’ve been kind of looking at the mixed comments is what those folks are really saying is they desperately, passionately want the next big thing. So I actually think that those two items are being conflated … It’s pretty clear to us that there is a huge audience around the world that is gonna love this title. So hopefully we’ll get there.”

For Blizzard to succeed with Diablo Immortal it will have to avoid harming the Diablo brand and not detract from Blizzard’s other products, and I think it can do both. For one, development of Diablo Immortal has been outsourced to a company in China, leaving the in-house staff to focus on new titles (Diablo 4?). Second, if anything it will bring the Diablo universe to a whole new generation who have probably never used a computer for gaming.

I personally won’t be playing it, but then I don’t play mobile games at all; I’m not their target demographic. Diablo Immortal is a play for new markets, both millennials who dislike PC gaming as much as I dislike mobile gaming, and China, which is expected to have 768 million gamers by 2022.

The real issue is fewer users

As with Facebook and Twitter, investors are obsessed with the real money-maker: active users. Activision Blizzard on Friday reported its third straight quarterly decline in monthly active users (345 million, down from 352 million), sending its share price down 10%, a fall far more severe than last week’s BlizzCon backlash.

People are rightly unsure if Blizzard still has its mojo, or if it has fallen out of touch with the gaming community. Is Diablo Immortal the best it can do? Wyatt Cheng, the lead developer on Diablo Immortal, certainly didn’t help matters when he responded to the crowd’s boos by quipping “do you guys not have phones?”. Ouch.

Activision Blizzard is still an enormous gaming company with valuable intellectual property and a huge, loyal fan base. But unless it announces something other than a World of Warcraft reboot (“Classic”), yet another remastering of an old game, and the worst version of Diablo remade for mobile (1 & 2 were better on all fronts outside of the game engine), then even its most loyal fans will slowly abandon ship and its share price will continue to slide.

Issue 9: Why Blizzcon failed again was compiled by Justin Pyvis and delivered on 11 November 2018.