The story of Blizzard Entertainment, chronicled in Jason Schreier’s Play Nice, offers a fascinating case study in how creative organizations transform as they grow. From a small studio in the early 1990s to one of the most influential forces in gaming history, Blizzard’s journey reveals the inherent tensions between artistic vision and commercial scale.
Blizzard is deservedly recognized as a best-in-class creative organization. The studio released some of the most iconic and influential titles in video game history—Warcraft, StarCraft, Diablo, World of Warcraft, and Overwatch. These weren’t just commercial successes; they were cultural phenomena that defined genres and shaped the industry for decades. Few studios can claim such a legacy of groundbreaking, generation-defining work.
The Founding Vision
In the early 1990s, Blizzard (originally Silicon & Synapse) was built on a clear philosophy. The founding requirement was simple: you had to be a gamer to work there. This principle shaped everything that followed. The company developed what they called the “Donut Theory”: create games deep enough for the hardcore center while remaining approachable for the broader midcore ring.
Their development approach was captured in one phrase: “It’ll be ready when it’s ready.” This represented a willingness to prioritize quality over market timing. The belief was straightforward: if you serve players first, the profits will follow. For subscription-based PC games like World of Warcraft, this philosophy could be valid. I’ve explained elsewhere why this isn’t the case with free to play games.
The creative process reflected this philosophy. There was no rigid process. Everybody contributed to design. Teams would debate for hours before finding consensus. In this environment, “he who shouted the loudest and most frequently often got heard.” It was organic, iterative, and it produced some of gaming’s most beloved franchises.
The Realities of Growth
As Blizzard expanded from 20 employees in 1995 to 500 by 2004, and then to 3,000 by 2007, the company faced new challenges. The informal “everybody contributes” approach that worked with 20 people became difficult to sustain at scale. By 1999, with 100 employees, the company recognized the need for formal team structures.
The work was intense. Blizzard employees worked long hours, with people sometimes sleeping at the office. Compensation, however, was below market rates. This became known as the “Blizzard tax” – accepting less pay for the privilege of working on iconic games. Employees traded financial reward for the opportunity to create legendary titles, a trade-off that many willingly made despite the financial sacrifice.
The company’s ownership changed hands multiple times during this period. In 1994, Davidson & Associates acquired Blizzard for $6.75 million (with Adham receiving 60% and Morhaime 30%). In 1996, a mail-order company acquired Davidson & Associates itself for over $1 billion in stock. By 1998, following the Cendant scandal, Blizzard was sold to Vivendi. Then in 2008, the Vivendi-Activision merger closed, making Blizzard part of Activision Blizzard. Over subsequent years, Activision increasingly absorbed Blizzard functions and integration deepened, with Blizzard becoming more fully part of Activision’s operations.
The Shift to Live Operations
World of Warcraft’s 2004 launch fundamentally changed Blizzard’s business model. Unlike previous “ship and done” releases, WoW required continuous operation where “shipping was just the beginning.” This demanded different capabilities: predictability, stability, and a consistent content pipeline.
The post-WoW era introduced new challenges. By the mid-2010s, WoW subscriptions had declined to 5.5 million—less than half the peak of 12 million reached in 2008. Between 2010 and 2016, Blizzard showed only a 2.75% compound annual growth rate, and the cumulative moving profit average actually declined during this period despite maintaining profitability.
But the challenge went beyond just creative philosophy versus business metrics. The fundamental business model was shifting. The traditional boxed product model—where you ship a game, it sells, and you move to the next project—could accommodate Blizzard’s “ready when it’s ready” approach. Creative ambition was essential. You needed to aim for breakthrough quality. But you also needed products to actually release. And those products, once shipped, generated their revenue largely upfront.
Output matters for both boxed products and live service games. But it matters differently – and far more critically – for live service. Here’s why: creating new franchises and IP is hard and unpredictable. Some level of chaos is expected in that process; things can’t be linear when you’re inventing something new. But when you have a successful franchise, that’s a unique opportunity to capitalize on success. You need to output frequently and regularly to make the most of that successful game. A proven franchise with an engaged player base is an asset that demands consistent cultivation.
Live service games changed the operational equation entirely. For a live service model to make sense and scale, you need to release content at regular intervals. Quality expectations can’t supersede output requirements. Players expect ongoing content. The business depends on predictable release cadences to drive engagement and retention. Revenue becomes tied to consistency, not just to the quality of individual releases.
This highlights a fundamental tension in game development: the quality versus quantity debate. Both are important. Quality is a necessary condition to be successful – poorly made games don’t retain players or generate positive word-of-mouth. But quantity – the amount of releases, updates, content to sell – is also critical for business results. Quality alone can’t make up for a lack of quantity. A live service game with infrequent updates, no matter how polished, will lose players to competitors who provide regular new experiences. The business model requires both: sufficient quality to maintain player trust, and sufficient quantity to sustain engagement and revenue.
For a privately held creative studio, fluctuations in operating income might be acceptable when driven by a creative mission. Release cycles naturally create peaks and valleys. A hit game generates enormous revenue, followed by quieter periods of development.
But Activision Blizzard was a publicly traded company. Public markets don’t reward inconsistency; they demand predictable, constant growth quarter over quarter. Shareholders expect upward trajectories, not the natural rhythms of creative development. This created a fundamental mismatch: Blizzard’s creative model produced irregular financial results and declining profit averages, while the public market structure required steady, demonstrable growth.
Activision brought a focus on speed, stability, predictability, and efficiency – the four pillars designed to ensure sustainable business performance in a public company context. These weren’t arbitrary metrics; they were responses to the structural requirements of public ownership and the operational demands of live service games.
This created profound tensions. The chaotic, passion-driven development style that characterized early Blizzard – where projects could be debated endlessly, where “he who shouted loudest” influenced direction, where knowledge was undocumented and intuitive – faced fundamental questions about scalability. This approach had produced masterpieces, but it also created inefficiencies and bottlenecks. Without structured, documented processes, the company struggled to operate predictably at scale or deliver content at the regular intervals that live service required.
The Overwatch team’s resistance to expanding beyond 150 people exemplified this tension. They understood that the organic, everyone-contributes dynamic that fostered creativity might not survive bureaucratic growth. But from a business perspective, questions arose: with thousands of employees, how many should be in development versus support roles? Was the resource allocation optimal for predictable content delivery?
Two Worlds Colliding
Throughout these changes, Blizzard developers maintained an unwavering commitment to their creative vision – even when it meant overriding player preferences. The Diablo III Auction House decision exemplifies this approach. The Auction House was an optional feature that many players actively used and enjoyed. Those who preferred to grind for loot could still do so; the feature simply added more ways to engage with the game on players’ own terms.
Yet Blizzard removed it. The reasoning: designers believed that if character progression didn’t involve killing monsters, it undermined the core experience they wanted to create. This wasn’t about protecting players from a harmful feature – it was about enforcing a specific vision of how the game should be played. Players were paying for the game, but they had to experience it the way designers dictated, not how they chose.
This pattern extended throughout Blizzard’s approach. The studio was “intentionally not monetizing” when other developers embraced new business models. When developing Hearthstone, the team focused primarily on gameplay rather than metrics like cost per install or lifetime value. Arguments could stretch for hours before consensus emerged. Projects could be delayed indefinitely if they didn’t meet internal quality standards. When World of Warcraft fans requested access to older expansions, developers simply told them no – that’s not what players really wanted (they just didn’t understand it).
There’s a sense of entitlement embedded in this attitude – toward both Activision and players. The underlying assumption seemed to be that past success guaranteed continued relevance, that creative vision alone justified operational autonomy. But in any competitive industry, you always need to recreate success. You can’t become complacent. And some people at Blizzard had become complacent, resting on the laurels of past achievements rather than adapting to new realities.
This represented a particular worldview: that creative vision should supersede market signals, player preferences, and business considerations. For subscription-based games funded by players who had already paid, this model worked. Quality produced loyalty, which produced predictable revenue.
But Activision operated within fundamentally different constraints dictated by public market realities. Public companies face quarterly earnings calls, analyst expectations, and shareholder demands for consistent growth. When Blizzard showed only 2.75% compound annual growth between 2010 and 2016—despite remaining profitable—this represented stagnation by public market standards. Public companies that don’t grow see their stock prices suffer, their cost of capital increase, and their strategic options narrow.
The focus on retention, engagement, and regular content releases reflected structural requirements of public ownership. Public companies need predictable revenue streams to forecast earnings, efficient operations to demonstrate margin improvement, and growth trajectories to justify valuations. These aren’t preferences; they’re fiduciary obligations to shareholders who invested based on growth expectations.
The Question of Expectations
Play Nice ultimately documents something more complex than a simple incompatibility. It raises uncomfortable questions about expectations and sustainability.
Blizzard’s leadership sold the company through multiple transactions, realizing substantial financial gains. Yet they expected the new owners to defer to their creative vision, operate on their timeline, and accept their priorities. The staff, meanwhile, worked for below-market wages under the “Blizzard tax” while their leaders benefited from these sales.
There’s a certain logic gap here. If developers want the freedom to prioritize creative vision over predictable business performance, perhaps remaining independent makes sense. But once you’ve sold to shareholders – particularly in a public company structure – can you reasonably demand they accept irregular growth and creative unpredictability? There’s no free lunch. Selling comes with obligations.
Similarly, the insistence on dictating how players experience games – removing features they use and enjoy because designers prefer a different approach – suggests a particular sense of ownership over the experience. Players were funding these games, yet their preferences were secondary to designer vision. The Auction House removal is emblematic: it didn’t hurt players who wanted to grind, it simply removed options from those who preferred alternatives.
The chaos that enabled Warcraft, StarCraft, Diablo, and World of Warcraft relied on undocumented knowledge, passionate arguments, and the freedom to miss market windows. This worked beautifully for boxed products where each release stood alone. But live service games require different operational models. You need to release content at regular intervals for the business to make sense and scale. Quality expectations can’t supersede output requirements indefinitely.
The structures, processes, and efficiencies required for public market predictability and live service operations operate differently than informal creative approaches. Documented processes enable scalability. Predictable timelines enable revenue forecasting and meet player expectations for ongoing content. Efficiency metrics enable margin expansion. These may constrain creative freedom, but they’re the trade-off for the valuations that leadership accepted when selling.
This isn’t about right versus wrong. It’s about whether expectations aligned with reality. Can you maintain complete creative autonomy after selling to a public company? Should players fund games but accept limited agency in how they experience them? Can leadership benefit from sales while staff accept below-market compensation, then demand the new owners respect their vision above operational requirements?
Understanding the Trade-offs
The gaming industry was transforming during this period. Live service games created new possibilities and new demands. Public market expectations shaped what was feasible. Player bases grew from thousands to millions, creating both opportunities and complexities.
Blizzard’s evolution reflects broader questions about creative organizations and ownership structures. The chaotic approach that Blizzard pioneered – where design emerged from passionate arguments, where intuition trumped documentation, where quality gates could delay releases indefinitely – produced extraordinary, industry-defining results. No one can dispute Blizzard’s creative achievements.
But the boxed product model that allowed this approach was giving way to live service games. And live service requires operational consistency: regular content releases, predictable cadences, structured development that can meet player expectations and business requirements. Quality remains essential, but it can’t be the only consideration when players and revenue depend on ongoing content delivery. When you have a successful franchise – a proven game with an engaged player base – that’s a unique asset that demands consistent cultivation and frequent updates to capitalize on its success.
Activision’s push for speed, stability, predictability, and efficiency was about solving multiple problems simultaneously: operating within public market constraints, delivering live service content at scale, and meeting the operational requirements that modern games demand. When you’re delivering minimal growth with declining profit averages while subscribers drop from 12 million to 5.5 million, the status quo isn’t sustainable.
Play Nice offers valuable insights into the collision between creative vision and market structures. It shows why certain creative models may be incompatible with public ownership and live service operations—not because either approach is inherently wrong, but because the expectations don’t align. Blizzard created some of the most iconic and influential games in history, an achievement that deserves recognition. But the story also raises questions about trade-offs: the creative freedom, the player control, the financial benefits of selling, the operational autonomy, and the live service model—all simultaneously. Understanding which trade-offs you’re willing to make when accepting which benefits may be the real lesson.
Alexandre Macmillan 