Joshua Burke # 6967353

Blizzard’s role in the Australian market comes from the sheer number of players

in Australia and the fact that any Australian game company planning to tackle

the Action-RPG or MMORPG genre will be forced to analyze, design and compete

against Blizzard’s massively successful World of Warcraft, Starcraft, Diablo and

Warcraft franchises.

Blizzard Entertainment was originally founded in 1991 as “Silicon & Synapse” by

Michael Morhaime, Allen Adham and Frank Pearce as a small company which

focused mostly on porting games for the Amiga and Commodore 64. An

important change in strategy came when, in 1994, S&S began releasing their

own games, most notably The Lost Vikings which was published under Interplay

Entertainment. The Vikings games were set apart from their peers by their

unique game play which had players controlling up to three characters at once

and working together in order to solve the puzzle. By late 1994, they had

captured the attention of distributor Davidson & Associates, who purchased

them for just fewer than ten million dollars, with Blizzard shortly releasing the

first of their genre-defining RTS games Warcraft: Orcs and Humans, which

became the cornerstone for the rest of the Warcraft series. In 1995 Blizzard

began development, lead by Christopher Metzen, on their Starcraft series. By

1996, Blizzard had acquired Condor Games which were working on their RPG

series Diablo, renaming the studio to Blizzard North and eventually releasing

both Diablo II and its subsequent expansion pack. These three franchises and

their further development (Diablo III, Starcraft II, World of Warcraft) continue to

the be the main focus of Blizzard Entertainment, although they have also

managed to successfully create trading card and board games based around

their PC series. Coinciding with the release of Diablo in 1997, Blizzard also

unleashed their Battle.Net client as the first multiplayer server to be

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incorporated directly into a game. 2000 brought the introduction of Diablo II,

which sold one million copies in the first 2 weeks and was heralded as a great

success.1 Blizzard added to their Warcraft franchise with Warcraft III and The

Frozen Throne expansion pack, which has continued to be popular with the

continuation of the Warcraft story line, but also in multiplayer with the DOTA

Allstars map and user-designed Tower Defence challenges. In 2004, Blizzard

expanded their offices internationally in France and released World of Warcraft

which quickly overcame its growing pains to become the largest MMO in the

world with over 11.5 million monthly subscribers.2 In the last few years, Blizzard

has been focusing on continuing development of World of Warcraft with two

successful expansion packs, as well as unveiling development on their upcoming

continuations of the Diablo and Starcraft franchises with Diablo III and Starcraft

II.

Originally, Blizzard marketed their games specifically to the budding RPG genre

derived from Dungeons and Dragons style dice-based battle systems and plot-

driven sequences. A large focus of their market consisted of North America due

to their lack of international offices and the relatively small incentive of localizing

versions of their games. However, with the launch of World of Warcraft, in order

to snatch market share from the largely Asian MMO market, it has become an

increasingly important goal for Blizzard to focus on having their product available

to the greatest number of countries. The release of Warcraft III, for instance, was

marketed only to North America and Japan, whereas World of Warcraft’s release

was in English, and then contained localizations for Germany, Korea, France,

Spain, China and Russia.3 Currently, Blizzard has offices in North America, Asia

1
(Strautman, J, 2000)
2
(Blizzard, 2008)
3
(Rolandius, 2009)

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and Europe, which allows it to adapt to the specific market differences unique to

each of the three regions.

Without a doubt, World of Warcraft and its two expansions are Blizzard’s biggest

sources of revenue, with a massive $314 million income for the quarter as

reported by the NPD4. In terms of mechanics, World of Warcraft is very similar to

other MMORPGs in that a player must gain levels through quests or by slaying

monsters. However, several innovations exist in World of Warcraft that improve

player-experience and encourage a player to maintain their monthly

subscription. For example, additional things that a player can do such as

leatherworking, fishing or crafting encourage replayability. By focusing on

grouping and “raiding”, Blizzard essentially forces a player at a higher-level to

group with people of similar interests in a disciplined group of adventurers

designed to explore and defeat the bosses of Azeroth. Finally, by staying true to

the story of the Warcraft series by including bosses and items seen in the game,

there is a greater push and explanation behind the character that is not evident

in other “grinding” MMORPGs.

The growth and subsequent success of Blizzard Entertainment from its roots as

“Silicon & Synapse” in 1991 can largely be attributed to two key events; the

hiring of Chris Metzen and the release of World of Warcraft. Apart from that, a

focus on games that were unique for the times, but provided a high level of re-

playability and which had a strong backbone to their characters and worlds, set

their games apart from the competition and won the loyalty of many fans.

In 1995, Chris Metzen, who had been employed by Blizzard since 1994, played a

significant role in developing the fictional universe of Warcraft II. His work

included concept art, documentation and scenario design. One of the selling
4
(Thorsen, T. 2009)

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points of the Warcraft series has been its strong lore-based campaign mode,

which also played a large part in the back-story for the World of Warcraft

expansion The Burning Crusade. Metzen’s later work included the storyline and

the creation of the Diablo universe and the story and script of Starcraft. Since

2001, he has been accredited as the creative director with his extensive work in

Warcraft III. Without his input into their creation, it is unlikely that Diablo,

Starcraft or Warcraft would have had the complicated but believable plot-line

(and thus the reason for the avatar’s actions) that set it apart from other games

of the era.

Likewise, the release of World of Warcraft was an extremely strong and risky

move on Blizzard’s part because it meant they had to adapt quickly to a market

that encouraged constant change, high overhead, server costs, and a stringent

quality standard, all whilst competing with large Korean companies which had

dominated the MMORPG genre with games such as Ragnarok Online and Lineage

II. By propelling the large Warcraft fan base of North America into the game,

Blizzard were able to stress test, develop and polish a game that was user-

friendly, relatively bug-free, and true to player’s demands. By then encouraging

local versions of World of Warcraft through translation of the game and the

localization of marketing ads, Blizzard was able to expand past their primary

Asian markets (which encompass about half of their current subscribers5) to take

the market lead as the most popular MMORPG (in terms of numbers of

subscribers) in the world, providing a solid and recurrent stream of income for

the company.

In terms of weaknesses, Blizzard has managed to avoid the pitfalls of previous

companies by being extremely receptive to the wishes of its users, yet their

5
(Schramm, M, 2008)

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marketing strategy can alienate new players from being able to fully enjoy their

game.

Blizzard’s potential downfall comes in their tactic of releasing several expansion

packs for each of their large series. This is great for providing players with extra

dungeons to explore and content such as items to conquer or levels to gain, but

in a large part this means that newer players not only have to pay for the original

game, but in order to interact with a large proportion of the gaming community,

need to possess all of the expansions. In Diablo II, for instance, there are huge

variances (inventory sizes, items and skills) between the original game and the

expansion, Lord of Destruction. Blizzard specifically designed this marketing

model for Diablo II, as can be seen in the fact that the original game spans only

four of the five acts of the storyline, meaning that the player literally has to buy

the expansion pack to finish the game or to enjoy multiplayer. Whilst the added

quests, acts, characters, items and skills invariably required extra development

time, nine years after release, it still costs $70 for the Battle Chest6 which

contains both games. A similar problem is encountered with World of Warcraft, in

which players without the expansion are not able to access a large part of the

multiplayer environment. With aspects such as raiding the latest dungeon and

group-play being a fundamental reason that players continue to play World of

Warcraft, inhibiting players by having to buy the original game plus two

expansions as well as requiring a monthly subscription per account invariably

means that a large portion of the market is alienated. Blizzard doesn’t show any

plans to stop this strategy, as, with the announcement of Starcraft II, comes

Blizzard’s decision to split the game over a trilogy.7 With the economic crisis and

high unemployment, this strategy does not bode well for new players that have

6
(EB Games, 2009)
7
(Vasconocellos, E., Ocampo, J, 2008)

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to choose between paying $150 in order to start World of Warcraft, buying a

cheaper product from a competitor.

Concerning competition, Blizzard is exactly where it wants to be – at the head of

innovation and leading with a huge fan-base. Traditionally MMORPGs have been

the domain of Korean companies such as NCSoft and GRAVITY, but these games

are too specific for the region to be adopted into mainstream gaming in places

such as North America or Europe, which is where the larger markets sit. That

being said, its main competitor is EA Games, which, in recent years, has been

focusing on acquiring as many games studios as possible in order to branch out

over as many different genres. An example of this could be seen in EA’s

upcoming Battlefield Heroes which is a free-to-play MMORPG that gains revenue

through advertising. Whilst it is unlikely to wrestle much, if any, market share

from Blizzard, it must also been seen that if a player has the choice between

paying $20 a month, or receiving similar entertainment for free, there is the

potential of Blizzard needing to introduce greater incentives for new players to

join.

Overall, Blizzard is tactically and financially in a great position and from its

inception, has focused on creating quality games that appeal to their specific

market that are consistently well-received by players.

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References:

Blizzard, C 2008, ‘World of Warcraft subscriber base reaches 11.5 million

worldwide.’ In Blizzard Entertainment, accessed May 12, 2009, from
<http://eu.blizzard.com/en/press/081223.html>

EB Games, C 2009, ‘Diablo 2 Battle Chest’ in EB Games Australia,

accessed May 12, 2009 from
<http://www.ebgames.com.au/PC/product.cfm?ID=389>

Rolandius, C 2009, ‘Localization’ in WoWWiki, accessed May 12, 2009 from

<http://www.wowwiki.com/Localization>

Schramm, M, C 2008 ‘World of Warcraft hits 10 million subscribers.’ in

WoW Insider, accessed May 12, 2009 from
<http://www.wowinsider.com/2008/01/22/world-of-warcraft-hits-10-million-
subscribers/>

Strautman, J, C 2000, ‘Diablo II sells 1 million’ in UHS, accessed 12 May

2009, from
< http://www.uhs-hints.com/articles/news/000719002.php>

Thorsen, T, C 2009 ‘Guitar Hero tops $2 billion, Activision Blizzard earns

$981 Million in Q1.’ In Gamespot, accessed May 12, 2009 from
<http://au.gamespot.com/news/6209327.html>

Vasconocellos, E., Ocampo, J. C2008 ‘Blizzcon 08: StarCraft II Split into

Three Games.’ In IGN PC Australia accessed May 12, 2009 from
<http://au.pc.ign.com/articles/918/918895p1.html>