Jason Schreier has been busy, following up the Diablo mobile game announcement at Blizzcon 2018 with an indepth article about Diablo, and by extension, Blizzard itself.
The Past, Present, and Future of Diablo dropped on Wednesday, right before Thanksgiving in the US, so it is understandable if you happened to miss it then. But go and read it, then come back here.
I'll wait.
Pulling the Diablo expac from development speaks volumes to me. It tells me that upper management was feeling the pressure from the lousy D3 release, and they didn't have confidence that the first D3 expac would right the ship. That was a big departure from Blizzard's previous behavior, where they were willing to wait and work on something before it was good enough to release.
As much as Titan was considered a "failure" by many internally because they never got it across that goal line, it does provide a big peek into Blizzard's thought process. Because Blizzard had the WoW money coming in --as well as a lot of customer goodwill-- Blizzard could afford to throw money at something that ultimately became a "failure", although the release of Overwatch from the ashes of Titan proved that Blizzard could still make a fantastic game from the leftover pieces. I realize that people would argue that Blizzard could afford to do that because of the WoW money, but that ethos was baked into Blizzard's culture from the get-go. The WoW money only allowed Blizzard more space to try to make a failure work.
However, once Activision Blizzard struck out on their own, there was bound to be a culture clash from the two entities as to which vision would ultimate win out.When A-B was part of Vivendi, this sort of clash wasn't necessary because A-B was a small part of the Vivendi conglomerate. When A-B went solo, however, they couldn't afford "poor sales" like they could in the past. So how would this end up?
Well, we do have a previous merger that provides look into the dynamics of how this would work out, and ironically enough it involves two major computer companies, Compaq and Hewlett-Packard.
In one corner, there was Compaq; the maker of the first PC clone that challenged the IBM for dominance in the PC space. In the other was HP, which built its reputation first on lab electronics and calculators, and then later on PCs. The two were big players in the PC market, and when HP's Carly Fiorina first announced the merger the business analysts weren't so sure about how the merger would work out, suggesting that the companies didn't complement each other very well. However, in spite of a revolt led by Walter Hewlett, son of one of the two founders Bill Hewlett, Carly got her wish and the merger happened.
The two corporate cultures, however, couldn't be more different. Compaq was very much a "fly by the seat of your pants" outfit that would throw products against the wall to see what would stick and then patch things to make them work, while HP was more ingrained in a slower, methodical, make-sure-it-works-before-releasing style of development, based on openness and trust, the legendary HP Way. (Does this sound familiar?) Perhaps bruised by the revolt and stung by the criticism from analysts, Carly used the merger to throw out most of HP management and replace them with Compaq people, leading to the eventual loss of the HP corporate culture within its own company.
With Activision Blizzard, we are seeing a similar fight appearing. Activision is very much a "release every year with some changes but with a formula that doesn't vary very much" type of outfit. Blizzard works on things until it is perfect enough to release. Alas, the signs don't look good for Blizzard in the long run, as the killing off of the second D3 expac was the first unofficial sign that Blizzard's management was starting to feel the "what have you done for me this quarter?" that seems to infest publicly traded companies the past 3-4 decades. The end of the article, where Blizzard's new finance person has started talking about "cost cutting", is another ominous sign that Blizzard's management is starting to lose its battle to remain independent from direct control by Bobby Kotick's and the bean counters from the Activision side of the company.
In my personal opinion, I think it's time for Blizzard to spin off and become a privately held company. They may not need to do it to develop games, but if they want to develop games the way they've always done it, they'll need to be free from the influence of an alien corporate culture (Activision) and the pressure to perform by shareholders (publicly traded on the market). The freedom to fail is a powerful thing, because it leads to risk and innovation. If a company becomes risk adverse and settles for churning out products that vary little from year to year, they may make money but their dreams become smaller, concerned with focus groups and earnings per share and not rocking the boat. If Blizzard wants to continue to dream big, they need to control their own destiny.
The Past, Present, and Future of Diablo dropped on Wednesday, right before Thanksgiving in the US, so it is understandable if you happened to miss it then. But go and read it, then come back here.
I'll wait.
***
Pulling the Diablo expac from development speaks volumes to me. It tells me that upper management was feeling the pressure from the lousy D3 release, and they didn't have confidence that the first D3 expac would right the ship. That was a big departure from Blizzard's previous behavior, where they were willing to wait and work on something before it was good enough to release.
As much as Titan was considered a "failure" by many internally because they never got it across that goal line, it does provide a big peek into Blizzard's thought process. Because Blizzard had the WoW money coming in --as well as a lot of customer goodwill-- Blizzard could afford to throw money at something that ultimately became a "failure", although the release of Overwatch from the ashes of Titan proved that Blizzard could still make a fantastic game from the leftover pieces. I realize that people would argue that Blizzard could afford to do that because of the WoW money, but that ethos was baked into Blizzard's culture from the get-go. The WoW money only allowed Blizzard more space to try to make a failure work.
However, once Activision Blizzard struck out on their own, there was bound to be a culture clash from the two entities as to which vision would ultimate win out.When A-B was part of Vivendi, this sort of clash wasn't necessary because A-B was a small part of the Vivendi conglomerate. When A-B went solo, however, they couldn't afford "poor sales" like they could in the past. So how would this end up?
Well, we do have a previous merger that provides look into the dynamics of how this would work out, and ironically enough it involves two major computer companies, Compaq and Hewlett-Packard.
***
In one corner, there was Compaq; the maker of the first PC clone that challenged the IBM for dominance in the PC space. In the other was HP, which built its reputation first on lab electronics and calculators, and then later on PCs. The two were big players in the PC market, and when HP's Carly Fiorina first announced the merger the business analysts weren't so sure about how the merger would work out, suggesting that the companies didn't complement each other very well. However, in spite of a revolt led by Walter Hewlett, son of one of the two founders Bill Hewlett, Carly got her wish and the merger happened.
The two corporate cultures, however, couldn't be more different. Compaq was very much a "fly by the seat of your pants" outfit that would throw products against the wall to see what would stick and then patch things to make them work, while HP was more ingrained in a slower, methodical, make-sure-it-works-before-releasing style of development, based on openness and trust, the legendary HP Way. (Does this sound familiar?) Perhaps bruised by the revolt and stung by the criticism from analysts, Carly used the merger to throw out most of HP management and replace them with Compaq people, leading to the eventual loss of the HP corporate culture within its own company.
With Activision Blizzard, we are seeing a similar fight appearing. Activision is very much a "release every year with some changes but with a formula that doesn't vary very much" type of outfit. Blizzard works on things until it is perfect enough to release. Alas, the signs don't look good for Blizzard in the long run, as the killing off of the second D3 expac was the first unofficial sign that Blizzard's management was starting to feel the "what have you done for me this quarter?" that seems to infest publicly traded companies the past 3-4 decades. The end of the article, where Blizzard's new finance person has started talking about "cost cutting", is another ominous sign that Blizzard's management is starting to lose its battle to remain independent from direct control by Bobby Kotick's and the bean counters from the Activision side of the company.
***
In my personal opinion, I think it's time for Blizzard to spin off and become a privately held company. They may not need to do it to develop games, but if they want to develop games the way they've always done it, they'll need to be free from the influence of an alien corporate culture (Activision) and the pressure to perform by shareholders (publicly traded on the market). The freedom to fail is a powerful thing, because it leads to risk and innovation. If a company becomes risk adverse and settles for churning out products that vary little from year to year, they may make money but their dreams become smaller, concerned with focus groups and earnings per share and not rocking the boat. If Blizzard wants to continue to dream big, they need to control their own destiny.
Heh, I knew what this was going to be about the moment I saw the title.
ReplyDeleteI liked this bit from the comments as well:
No successful company wakes up and decides they’re going to completely change from a great culture to a failing culture. And if you’re successful, it’s rarely an immediate life-or-death decision that suddenly shatters everything. Instead, the cultural shift and eventual failure are “death by a thousand cuts”. [...] And the thing is, on its own merits, each change by itself is both very moderate and sound very reasonable - e.g., “we aren’t saying NEVER innovate, we’re just saying let’s add one more layer of reflection before we try something innovative and new.” It’s only in total that these changes sum into the company being in a completely different place than it started and what made it successful.
Reminds me a lot of how WoW changed over time...
Sometimes change comes quickly, and sometimes it is death by a thousand cuts. Cataclysm is the former, while items such as elimination of PvP specific gear or the decision to run a legendary questline through a BG are the latter.
DeleteBut yes, that article disturbed me on many levels, because I've lived this in at least 2-3 companies. And, of course, you and I and all the other WoW players have seen this in WoW.
I think what has happened to WoW over time is very different from what is happening at the corporate level with Blizzard and Activision.
ReplyDeleteBlizz has, in the past, worked on and dumped a number of projects we've heard about. That is what mature companies do. They start a bunch of projects and cancel the ones that just aren't going anywhere. It is small companies or young companies that have to ship everything they start or die.
WoW is different from anything Blizz had done previously. They used to make a product, do an expansion for it, then move on. With WoW they had a product that just kept on delivering huge quantities of cash. They couldn't walk away from it, they couldn't just do the same thing over and over and expect people to stick with it, so they kept trying to shake things up. There is always a ton of pressure to keep a success going and there were already plenty of examples out there of MMORPGs that went well then tapered off over time.
The Blizz Acti thing though, that has to be about money. Blizz at the peak of WoW was delivering more than a billion dollars a year to the company. That has slipped. WoW is still a gold mine, but it is past its peak. And the new products, while profitable, haven't made up the difference. Overwatch, for example, has been slipping badly this year.
And when a division stops growing, the corporate masters feel the need to get in there and "fix" things. It is the Wall Street ethos, if you're not growing then you're dying. It doesn't matter that Blizz is the most profitable part of the company, it isn't bringing in quite as much so there must be something wrong.
As for an independent Blizz, that will never happen. What major stock holder or member of the board of directors would ever endorse that? Activision will absorb Blizz completely before it lets that cash cow go. Activision isn't EA, but it is close enough, and when EA buys you they milk you until you run dry, then they shut you down.
"And when a division stops growing, the corporate masters feel the need to get in there and "fix" things. It is the Wall Street ethos, if you're not growing then you're dying. It doesn't matter that Blizz is the most profitable part of the company, it isn't bringing in quite as much so there must be something wrong."
DeleteAnd this is what is wrong with Wall Street today. "Maximizing shareholder value" is a mantra that causes more harm than good, as it forces companies to plan from quarter to quarter (with Amazon being quite possibly the sole exception to this rule) instead of planning more for the long term.
"As for an independent Blizz, that will never happen. What major stock holder or member of the board of directors would ever endorse that? Activision will absorb Blizz completely before it lets that cash cow go. Activision isn't EA, but it is close enough, and when EA buys you they milk you until you run dry, then they shut you down."
I never thought Vivendi would allow Activision Blizzard to be spun off either, but it did happen. I think it would take a lot of money from an outside investor group to make it worth Kotick's while, but it's not impossible. It'd be closer to sports team ownership --or vineyard ownership-- than traditional investor ownership, as sports owners realize going in that their ownership is more a vanity project than anything else.