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Business - Written by on Friday, July 4, 2008 15:02 - 1 Comment

Wikinomics Report Card: Blizzard Entertainment

Can the unstoppable gaming juggernaut continue to WoW with Wikinomics?

This week’s edition of the Wikinomics Report Card will profile Blizzard Entertainment, the creators of World of Warcraft and one of the world’s most profitable gaming companies. In case you missed my last report card about General Motors, you can find it here. Like my previous entries, I will be evaluating Blizzard on the Wikinomics principles of being open, peering, sharing, and acting globally.

Company Background: Blizzard Entertainment was founded as Silicon and Synapse in 1991 by three UCLA students and after a number of name changes, settled on the name Blizzard Entertainment in 1994. That same year, Blizzard broke though when they released Warcraft: Orcs & Humans and solidified Warcraft as its flagship franchise the following year with the release of Warcraft II: Tides of Darkness. In early 1997, they revolutionized the industry by offering a free online gaming service, Battle.net, to go along with their new game Diablo. Blizzard built on its online success by releasing Starcraft in 1998 which has sold over 9.5 million copies to date. In addition to its success in North America, Starcraft built a huge fan base in Asia, specifically in South Korea. Starcraft became a pop-culture phenomenon in Korea. Professional games are broadcast on television and some games are played in stadiums with thousands of screaming fans. Blizzard released more and more successful titles over the years, and built up one of the largest and most loyal fan bases in the industry. As an example, I have purchased every Blizzard game since Warcraft II. Blizzard cashed in on this success in late 2004 by releasing its first massively multiplayer online game, World of Warcraft (WoW). As of January 2008, WoW has more than 10 million subscribers worldwide paying on average $15 per month.

chart11.jpg

Blizzard has been making headlines recently since it announced that it was merging with Activision, publisher of the popular Guitar Hero series. This merged company, Activision Blizzard, will be the most profitable pure-play company in the industry. The merger will approved pending a shareholder vote on July 8.

Being Open: Blizzard is a very open company in many ways. They offer fans guided tours of their headquarters, and even host an annual convention, Blizzcon for their fans. Lead designers of games often post in their official forums, and are very involved with the community in general. They take fan feedback very seriously, and often implement changes based on community recommendations. However, all Blizzard fans know that they are very closed regarding the release dates of their games. Whenever they are asked when a game is to be released, the response is “when it’s done”. This strategy is partly responsible for the consistent high quality for their games. Unlike most game companies, Blizzard is not given hard deadlines by their publisher, so fans are guaranteed a great deal of polish with each game.

Grade: A-

Peering: Blizzard has learned to harness their powerful community with peering. Since Warcraft II, they have released free “world editors” with their games. This gives users the ability to create their own content and has resulted in extending the replay value of their games. One of the most popular user-made modifications is “Defense of the Ancients” (DOTA) for Warcraft III. It has been called “…the most popular and most-discussed free, non-supported game mod in the world”. It could be argued that DOTA is more popular than Warcraft III.

Blizzard has also utilized peer production in World of Warcraft. Blizzard released a free API with the game that allows users to personally customize the interface of the game. These customized interfaces are so good that players are actually at a disadvantage not using them. With their next expansion pack, Wrath of the Lich King, Blizzard is planning on implementing the best aspects of the user created interfaces into their own.

Grade: A+

Sharing: Blizzard has always been very open to sharing their content. As described in the previous section, they release a large portion of their game to the public via world editors. In addition to that, Blizzard shares its games in its testing phase via open and closed betas. By sharing this content, Blizzard allows its fans to debug and balance the game for them. The best thing is that fans line up to do this as it gives them a sneak peak of the latest game. However, Blizzard usually tries to limit the number of testers to control the flow of feedback. The lucky testers must sign a non-disclosure agreement that prevents them from sharing any information about the game.

This, however, acts as an open invitation to hackers to try and leak the data as much as possible. This is where Blizzard is a little closed. After leaks occur, Blizzard tries its best to try and stop the leak through banning users, and even sometimes sending in its lawyers to shut sites down. I am unsure if this is the best strategy. I can see why Blizzard doesn’t want any mis-information spread, but I fail to see the harm in building buzz through the game by allowing the semi-public information to flow freely.

Grade: B+

Acting Globally: Blizzard is the leading Western entertainment franchise in Asia. As the graph below shows, the majority of its WoW subscribers come from Asia and it is growing at a much faster rate. Blizzard tries to release most of its game simultaneously worldwide and it has resulted in strong fan bases around the world. Although its North American and European markets are strong, Blizzard sees Korea as one of its primary markets for Starcraft II. It is possible that WoW’s success in China will translate to more sales of Starcraft II there as well.

chart21.jpg

Grade: A

Overall Verdict: Blizzard is a great company that should only get stronger as its international fan base grows and they release sequels to its popular franchises. When they announced Diablo 3 at the Blizzard Worldwide Invitational last week, it took the Internet by storm. If Blizzard is able to leverage Activision’s console expertise and presence after the merger, they should be able to substantially grow their market and fan base. Personally, I can’t wait for the first Activision-Blizzard game. The great thing about Blizzard, is that they have always used Wikinomics principles when developing their games. What do other Blizzard fans think? Are they going in the right direction? Do you have any other Blizzard examples to share?

Overall Grade: A



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Wikinomics » Blog Archive » Wikinomics Report Card: De Beers
Jul 12, 2008 12:16

[...] company De Beers. I case you missed my last report card on Blizzard Entertainment; you can find it here. I would like to thank Will Runyon for suggesting this week’s topic and directing me to this [...]

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