Blizzard’s Biggest BlizzCon in Years: Can They Deliver?

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All right, next Blizzard.
Blizzard, yes BlizzCon everything that was announced. Let's just quickly go through the big announcements. We have Warcraft forever, which is a re-envisioning of the original game. We have this Diablo Netflix thing. I don't know exactly what that is. Diablo 5 apparently is a couple years out. That was an early announcement. We got a trailer. We have a new Starcraft open world shooter, which apparently is a single player. Don't know who's working on this Eric. Is this Korea? I don't know what's going on. But which team is this? There was a couple updates to Hearthstone that were kind of like run-of-the-mill. We get a Warcraft 3 expansion. We get a Heroes of the Storm. Hero, I mean this just felt like a victory lap. What's going on?
You forgot the expansion. So World of Warcraft expansion for 2027. As far as I understand, the open world shooter is done is being in in Irvine. I don't think the Korea guys are working on other things. They work on Overwatch.

Look, I I'm a huge Blizzard fan, clearly. I've been playing World of Warcraft like a crack addict for the last few months. This was by far kind of the best BlizzCon I've ever seen from a product announcement perspective, for sure. I think I do kind of owe an apology to miss Johanna, who is running the show out there, because my assumption was that she did not have the chops to actually manage creatives at a studio like Blizzard. I think that's exactly what I said back then. It is clear that she not only is kind of currently managing the business pretty well, but she is clearly put these studios to task, right? So like like in order for them to get up there and feel comfortable about announcing all these type games, that is quite a testimony to her ability to get [ __ ] done at the studio. We'll talk to that in a minute. Look, the World of Warcraft strategy is [ __ ] impressive, right? Like the fact that they have the last Titan, which is the 2027 expansion for

the core game, they have Wow forever, and they have a Wow Legacy game. I can't remember the the name of it. So, basically three different SKUs is is insane, right? Now, I could geek out about this and we're going to talk about it a little bit about later, but it is crazy like how much World of Warcraft you can actually play in the next couple of months. Like it is it is nuts. And if you actually play the game and you're playing it, they've done a really good job of actually building this thing out. The third like Diablo 5, like you have to understand if Diablo 5 actually comes out in 2029, that's like 6 years instead of 11 between Diablos. Like that is that is impressive in and of itself, right? Because Blizzard has historically been horrible at getting these games out. And the open-world shooter in 2030, also impressive. Like the fact that they are going outside of their genre comfort zone and to build something else is kind of like the riot of yesteryear, I suppose. So, this is again, a clear departure from Blizzard in its history, right? These are really do I setting bold

expectations and setting these release dates that are [ __ ] miles away, right? But it makes sense given the current landscape of what's happening at Xbox. And this is where my cynical side comes out because as impressed I am and excited I am about what Blizzard is doing, there's a lot of warning signs that you have to think about when it comes to this sort of thing. First of all, this feels very charged in the sense that this is trying to make sure that the overlords at Microsoft or Xbox, Ms. Sharma, and the rest of her douchebag, you know, tech bros are happy, right? It basically justifies Blizzard's funding for the next 3 to 4 years, right? If if history is any guide to this, by the way, if you actually take history into account, none of these games are coming out. None of them. None of them are coming out on time. Like this has never happened at Blizzard, right? Particularly Diablo 5, right? That's impossible. And then it's the StarCraft shooter. If you look at history alone, now maybe Johanna is running a different

ship and the impetus and the and and the and the drive is a lot more aggressive now because of what's happening at Microsoft. That may be the case. The second thing that worries me a lot is that the wild team is big, but it's not that [ __ ] big, right? You can't have three live service MMOs working all in tandem with a team of people down at [ __ ] Irvine, right? The most expensive place to develop on in the world of Warcraft. It's like it feels scary, right? And exactly what is the hope to accomplish here? Are you trying to bring people back? Are you trying to get new users? Like what is the actual TAM for three different MMOs in the world of Warcraft, right? I I don't know. So, I think there's a lot of cannibalization potential there and and I don't really know exactly what they're hoping for on this. Now, me for as a focus group of one, I will be playing all three, but and then the StarCraft open world super, I said this

on LinkedIn. Look, I think this is super risky, but it makes a lot of sense given the IP. The IP lends itself to this sort of project. I think it's going to be a huge challenge for the studio. I don't know if they have the talent to actually execute against something like this. They certainly don't They've never made anything like this before, so it should be cool, but it's so far out. Like I have no idea, right? Um what's really cool, I think for everyone who's fans of Blizzard is like with this kind of skew plan and this kind of thing in place, like they are not going to get touched by Sharma and the tech bros, right? So, they seem to have free reign to basically make this [ __ ] happen. And so, let's hope they can do it. Because if they can execute this, I think they will be in really really good shape. But, I'm actually really excited for the future of Blizzard and the fact that they're making the investments required.
If Activision Blizzard was was still independent, just kind of a a funny word to use for a company that size, but if they were still independent would these timelines be the same, Eric?
They would never have announced this

much
Mhm.
content in one go. Ever.
Isn't that concerning that like the the ownership structure is changing behavior in this way?
It's like Thunderdome out there, man. Like you got to [ __ ] justify your existence, dude. Like you you you you you thrive or die, dude. It's like they got to go for the go for broke, you know? I
Is this like a 3 years of job security trade-off for hit rate or like what is this here?
Exactly. [clears throat]
Okay.
Like you got 3 years to pull this off, Johanna. Good luck. Good [ __ ] luck. Right? Because the minute things go off the rails, dude, [ __ ] Sharmaine's going to be in there with their like bean counters and tech bros and cutting the [ __ ] out of you guys. So like I mean that's that's the situation that you're in. Like it's it's that I mean this is my cynical take on it and I know Johanna would disagree. Johanna actually actually commented on one of the posts on LinkedIn like a day before BlizzCon. I was like shocked that she bothered. So I do owe her an apology. Like she's done a good job.
Well, hold on. Well, just tell her what you say. I think she said it was

something to the effect of there's a lot of misconceptions about her level of gaming experience.
Yeah, she basically called me out on my [ __ ] that she had no experience in managing studios, I think is what she was trying to say and she said it very very nicely. But between the lines she's like, you are a [ __ ] idiot, Eric, and look what I'm doing over here. That's what she I that's the way I interpreted it anyway. But um nonetheless I have to give her credit, you know? She's getting these guys to task, you know? Making [ __ ] happen.
This feels like a just a normal supply side playbook. Like I think it's great she's like kind of cracking the whip and everyone's back on the treadmill of like, all right, let's start to reimagine maybe Diablo 5 is more of an expansion stance. Maybe that's the that's scope. All right, let's get this into more regular beats. I certainly think Diablo could absorb that. World of Warcraft I think is just like a normal playbook that you would endorse. How can you be against this? Right? They're basically doubling down on what we know about MMOs, which is a bunch of crusty dudes who have been

playing the game for a really long time and their subcommunities and they're basically just saying like, look, here's a pathway to maintain your subcommunity, your server with your group of people in whatever environment you want. We'll get to the wild section, but like it continues to be something that generates incredible amount of revenue. That's grow that I mean they've It seems like they've grown the per user monetization on World of Warcraft over time. Uh no, you don't think so?
All those wild games though, they're in the same subscription, right?
Yes, for the for this new one it's in the same sub. But it's I don't think there's inner purchases, however. All of that's been stripped. There's an ARPU uplift you get. Although correct me if I'm wrong, Eric.
There is some monetization that they're doing and they're trying to get more aggressive on it, but I think they're held back quite a bit by the culture. But the expansion stuff they're doing, the character buying, the incremental like transfers and, you know, race transfers, all these other things they're adding do add up, but it's not nearly as significant I think as the subs.
Okay.

I don't know the number, but I would guess it's less than 20% of revenue. My concern is like having three live service games, MMOs with the team in Irvine, that seems like a [ __ ] heavy lift. Because it's not only just maintaining, you're actually building, you're adding content, you're adding races, you're adding classes, you're adding raids, you're adding dungeons, like all these things are happening across three different iterations of the game that are completely forked, right? Like they're not the same tech as far as I can tell, right? They're all completely different. So, I think that that's a huge challenge, I think. But again, I'll find out more. I'm excited, but I So, the other big story this week unrelated to what we were just talking about is this whole kerfuffle around Kojima, right? And this game isn't And this game was actually started like 2 years ago, and it was basically supposedly a spiritual successor to Metal Gear Solid, which is actually very

exciting. And so, basically what's happening is this moving over PlayStation said no, Xbox and Sharma said yes, basically. So, originally it was announced as a PlayStation exclusive like 2 years ago. Herman Hulst, the new CEO boss over there, really wanted to have this partnership with Kojima, but basically they canceled the project in June, and now they're moving over to Xbox. I'm really split down the middle on this one. I I I actually don't know where I stand, honestly, on this because for Sony, it was a [ __ ] terrible look, right? Like they already have a bad PR going on with the core, particularly the IGN-type folk, right? And for Microsoft, it's a [ __ ] huge win. I mean, Sharma looks like a goddamn rockstar to these same IGN folks, right? Because Kojima is beloved. However, however, it is clear that Sony would not give up something like this unless it was looking pretty [ __ ] bad, right? Like in 2 years, Kojima must have been

nowhere on this game and over budget and like they're looking down the barrel of a gun. They're like, we're not putting this money in this game. I mean, that's basically what this is saying because they know the PR hit they're going to take on this, right? Now, this is the reason I'm a little bit concerned is like, if I were 2 years ago looking at this game, I would have done it because the spiritual successor to Metal Gear Solid is completely different than the two [ __ ] games that Kojima has made in the last, I don't know, 8 years, which have been [ __ ] horrific, dude. Like they they they are like the most niche of niche games that haven't sold [ __ ] and likely lost tons of money for everybody who's been involved, right? So, those are not the games I would make bets on, but this particular game I would have, right? Because yeah, again, these two games that they he's made were exercising losing money. So, that's why I'm a little bit torn here because I would have done this game, but if this game is so far behind, I don't know if Microsoft really wants this albatross around their neck, right? They're just shoveling money at Kojima, you know,

trying to get this game out. Cuz if my if Sony doesn't like it, then I don't know why Microsoft thinks that they can do anything. And if Sony can't manage Kojima, certainly these Microsoft tech bros and Sharma can't manage Kojima. So, I don't know. And the other big thing here is that there's no exclusive thing talked about, right? This is not an Xbox exclusive as far as I can tell. This is This is going to be available on PlayStation anyway, right? So, Sony's really not losing much at all from a revenue perspective. It's more just from a PR perspective.
Wouldn't that contract obligation um dissolve if the relationship dissolved?
It's certainly not an exclusive PlayStation anymore, but that doesn't There is no evidence whatsoever that it's actually exclusive to Xbox.
They should do whatever they it's in the best interest of Microsoft, right? Like they're not constrained though. Like maybe they do it, maybe they don't. They'll just figure it out, right?
That's true, but most likely they're going to do it. That's Otherwise, they would have said
it on PlayStation.
Yes.

Why would they do that? That's not been the strategy they've been moving towards, right? Sharma Sharma's back on the exclusivity train. Like she pulled Gears of War, remember? That was the whole thing. The whole the whole drama.
There's no way financially for them to justify that, even with PC.
You could say the same thing for Gears. That's the whole point of exclusives though, is that you're trading off unit sales for console sales.
they should have announced it, right? That would have been a big plus for them, but they didn't. They didn't announce that at all. They intentionally left it out, which implies that
your best evidence. She do want to shove it in everyone's face. Only on Xbox.
I think in the short term it's a huge PR win for Sharma and their team. I don't think it's going to be worth the headache of managing Kojima as much as he's beloved and what a creative genius he is. The risk is the game is super niche and not profitable which is still the risk cuz they might not be able to replicate the success of Metal Gear. And if they don't have any potential for upside from a platform exclusivity I think I'd rather invest more money into teams at Blizzard.
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Right if I were if I were Xbox, I don't know. But uh you know, that's me. But

anyway, it's a really interesting thing that's happening. You know, that it's the Game of Thrones out there right now in terms of this, you know, Sharma trying to compete against Sony. And you know, we'll see we'll see how they do with this this game and see how it evolves over time. All right. Warcraft forever. This has been announced. This is a permanent classic style branch it looks like of the Warcraft SKU. You're going from level one to level 60 in Azeroth. 1,000 quests, some new dungeon raids. There are some new some new content that's coming into it. It's included in your base sub, so it's still subscription-based although there's some content packs that they're selling. The number of SKUs to your point Eric that Blizzard has for World of Warcraft is pretty astonishing. They have the retail SKU. They have the classic era. They have classic progression, Burning Crusade classic. They have hardcore, Season of Discovery, Warcraft forever, and Titan reforged which is the Chinese one. Uh it it actually has quite a bit of SKUs of this game. I mean, tell tell me tell me Eric, what's what's going on

here? I mean, I The only thing I'll add is like look at this this franchise makes a lot of money. I've done a lot of back and you know, I tried to [ __ ] out some numbers and I was looking at between 500 and 1.5 billion was what I was getting annually for World of Warcraft. So this is not Even though the cultural discourse has decreased, financially this game is still doing gangbusters. I'm giving the Blizzard particularly the World of Warcraft team and the Diablo team in particular anyway. They're they're doing a great job of managing these franchises. I think wow, the latest expansion has been really good. So, they've kept the the classic has been the great. Um and now they're bringing in wow forever. And so, I think what they're doing is maintaining their subs pretty strongly, particularly in the west. And they also finally redid the deal with NetEase, right? In China. Let's bring that back. Again, my my biggest concern is that they, you know, there were I think at peak the western subs, and I I could get this wrong, was like between like five and six million. Like that was like the super peak, like during the Cataclysm days. Like that that was like the best. And the and the remainder, I think it

was like another eight or nine or something were in China. That's That's my recollection, right? If you think six, five or six are the peak here, we've been sitting at two to three in that range in the west that are paying full boat subs, right? So, maybe you can get to three to four with all these different SKUs, but my my thinking is that they're just basically trying to maintain subs and increase the ARPU as you were suggesting, um through other means of mostly expansion packs and other packs. Like you can buy a class, right? With this new um expansion. Well, World of Warcraft forever, you pay 30 bucks to get access to a race. My only worry is that there's only a limited amount of people that are willing to pay this. And I I I remember this saying this at EA in 30 years ago. I mean, there's only a certain amount of people in the west that are willing to pay $15, $20 a month to play a [ __ ] MMO. Like it's like it's a just a limited audience.
There's nothing else. Every every other game has pretty much failed except some like obscure ones like RuneScape, which are kind of sitting there.
true. This
This is it.

Yeah, everything else is kind of falling. El- Elder Scrolls, the Star Wars game, EverQuest II is kind of done. Age of Yeah, all these games are kind of a lost and long I mean, I think they have some like oh, Final Fantasy was actually really competitive for a while, but I think they fell off the last expansion. So, anyway, I think they're doing the best they can in order to maintain this audience. Uh but three screws is a lot. But, I'm excited. And I should be able to get in the beta, hopefully, for forever in the next couple days. So, I will report back.
This is awesome, Eric. Like, this is a true forever franchise. I think they're just building trenches. I agree. This isn't This isn't a franchise that's going to like wake up overnight and have 10 million subs. But, I I Players are sticky as hell, and this will just like this will just give off cash for like the next 10 to 20 years. 30 years.
Dude.
I mean, this thing is just going to It's just going to print cash.
I've been paying a yearly sub since the beginning. So, they got me, dude.

They got me.
think this thing is I think this thing will generate cash for 30 30 I mean, 50? I don't know where where the net present value of this thing, I think, is just enormous. I just don't think you can get rid of these players.
No, I don't think so.
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