Jason Schreier
Appearances
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
After the send-in tobacco back in 1998, Blizzard wound up getting sold to this company called Vivendi, a French water company, which again, going from a mail order catalog company to like this merger with a health company to like a French utilities company. They're just like, what is going on here? So they're part of Vivendi for a little while.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Vivendi winds up with this games division, Vivendi Games. This was back when they were also like involved in Universal. So Vivendi had this whole entertainment strategy. Then their CEO got in all sorts of trouble for misappropriation of funds. That sort of thing, as the cycle continues. Basically, Vivendi wound up in a ton of debt, billions in debt, and was just facing all sorts of problems.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
There were rumors in the news every year about how they were in trouble and they were going to sell the games division, and it was really just not pleasant to be there, to be part of Blizzard, because you're just like, man, this sucks. We're making all this cool stuff, and we have no idea what's going to happen to our company.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
At one point, Mike Morhaime and his executive crew even talked about, like, can we buy out Blizzard? What would that look like? Which is a fun little alternate history speculation there. But anyway, so 2007 is when Vivendi Games announces they're going to merge with Activision.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
So it's not a buyout, it's a merger, and it becomes Activision Blizzard, because Blizzard is like the crown jewel of Vivendi Games. At the time, it seemed like a really good fit. And I think from the Blizzard side, it was like, okay, we've gone through all this corporate turmoil. Here is Activision. They're one of the most successful video game companies on the planet.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And the book Play Nice kind of tracks the history, like the rise of Bobby Kotick and the history of Activision. We could work well together. And also Activision is really good on consoles. We're a PC gaming company. This is actually a really good potential relationship. And it is for a while. For a few years, things go really well.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Blizzard is firing on all cylinders, WoW is growing every single year, and things seem to be going quite well. Blizzard always delivered on that promise. For 20 years, they delivered on the promise of, you leave us alone, you give us time, you let us delay the games a few times, and we will get you hits no matter what. And that changed in 2013 when they canceled this project called Titan.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
that was promised as the successor to World of Warcraft. And when Titan was canceled, that changed everything for the company, because then Activision Blizzard, run by Bobby Kotick, could look over and be like, hey, you promised us that you would deliver nonstop hits if we let you have all the independence and autonomy that you wanted, and you didn't, and you failed.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
You threw $80 million into a furnace. So we can't give you that same level of autonomy anymore. And he didn't directly say this, but it became clear in the coming months and years that as the pressure started, that Activision began to feel like Blizzard was failing. Suddenly, Activision is looking over and they're like, hey, we need to get some adults in the room here.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And what they wind up doing is they have Blizzard hire... a new CTO and a new CFO. And for the CFO position, they wind up recommending this guy who, so Bobby Kotick has this second-in-command Thomas Tipple, and Thomas Tipple knows this guy from his days at Procter & Gamble named Armin Zerza.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And Armin Zerza comes in as the new Blizzard CFO, and he is not somebody that a lot of Blizzard folks get along with, because he comes in and he's like, why can't we treat these games like diapers and soap and detergent and just ship them and start a new factory to make more of them? He has never made games before. He comes in with a very different perspective.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
He doesn't really understand video game fans. And he tries. He spends a little bit of time playing World of Warcraft. He tries to get it, but he just rubs people the wrong way within Blizzard. And at the same time as that's happening, Activision is applying more pressure from above on the Blizzard executive circle.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And it really starts hitting ahead around 2017, 2018, to the point where Mike Morhaime who is this beloved CEO of Blizzard and the co-founder of the company, he resigns. And he writes a letter, an email to Bobby Kotick towards the end of things, I got a hold of and quoted from in the book.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
He's like, hey, we need to set boundaries between Activision Blizzard and Blizzard, between the parent company and us, because you guys are interfering with our operations. And he says this way more politely, but basically that you guys... We need to preserve our independence, which it seems like Activision is not interested in doing.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Activision very much wants to come in and make everybody work the Activision way. And so the Activision way, I think I should back up and explain here for a second, is the Bobby Kotick way, which is to treat video game franchises as, in his words, products to be exploited, quote unquote. And what that means is everything needs to come out once a year at minimum.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
More than once a year, ideally, but at a minimum once a year. And you look at all the franchises that Activision has had, and that has been their strategy. Guitar Hero, Tony Hawk's Pro Skater, Skylanders, and most of all, Call of Duty. Call of Duty is the only one it's worked for. All the others just died unceremoniously.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
But because it worked so well with Call of Duty, Activision has turned it into this mega corporation. And so that is the kind of Activision mentality. It's like, commercial takes priority over development. We see games as products. We want them to be great. We want people to love them, but we also want them to be on a predictable schedule, coming out every year. And Blizzard is like the opposite.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Remember, from the beginning, Blizzard had been like, you give us time. We want time to spend on this art. Critics of Blizzard would be like, hey, you guys are really abusing that notion because nowadays, by this point, mid-2010s, like around 2018, they've been working on projects. Obviously, Titan was a big one that was like six years in development.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
They've been taking a lot of time, like more time than some of these games probably needed to take, especially now that they were entering the world of mobile, which generally takes a lot more faster than Blizzard. At Blizzard, a mobile game might take four or five, six years. In other companies, it could take six months.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Blizzard people would argue, well, that's how we make the best games in the world. That's why we've never released a bad game. Activision people would be like, yeah, but we got shareholders and quarters to hit and we have a plan.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And if you tell us this game is going to be out on this date and then you fail to deliver, that screws us over because our investors don't like that and our stock might take. So it's really this fundamental divide that comes to a head with Morhaime's resignation. And from there, Activision really starts taking over.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
It's funny you say that because I think an argument at Blizzard all the time that people like Mike Morhaime and his C-suite would make is if we delay a game, one of the reasons we're part of this massive company is so something else can help fill this ladder. You guys can save the quarter this year and then maybe we can save the quarter next year and that sort of thing.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
But that was a difficult argument to make to the Activision bosses because they... had all sorts of charts and numbers and reasons that Blizzard was failing. There was a lot of just talk about Blizzard failing to deliver on fans' expectations, failing to live up to what fans hoped for.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
The biggest point of contention, I think, was over World of Warcraft and how World of Warcraft expansions each took two years to make. And that drove the Activision people crazy. Because Blizzard would say, we would love to speed up the cadence of this. People love expansions. We want to get one going every single year. And they tried all sorts of things to make that happen.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And Activision people would say, well, why don't you just move everybody to the WoW team? Why don't you put thousands of people on the WoW team? And Blizzard would be like, no, we want people experimenting with new things. We want to give our talent agency in deciding what they want to do. And Activision was like, what? Well, that doesn't make sense. We just have everybody on Call of Duty here.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And that was the point of contention for a very, very long time, because Blizzard was not able to speed up development of WoW expansions. Activision said, throw people at the problem, hire hundreds of people and make that work. Blizzard said, no, that doesn't work for us. And on and on the battle continued. And then the same sort of thing happened with Overwatch.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
After that took off, Blizzard was trying to make a sequel. Activision was like, throw more people at the problem. Blizzard was like, no, we don't want to do that.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
They certainly saw an opportunity to get Activision Blizzard at a discount, although it wasn't too much of a discount. I mean, $69 billion, it's pretty wild. It's one of the biggest acquisitions in Microsoft history, not the biggest. Yeah, and one of the biggest in business history, certainly the biggest in video game history. Yeah, I mean, it was pretty titanic.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I think Phil Spencer at Microsoft, he had spent a long years just gobbling up studios. They had bought Bethesda a few years earlier, another substantial big game publisher. For him, this was like a big coup to be like, we're going to get everything. We're going to be like Thanos with his Infinity Stones and gobble up the entire video game industry.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And I think he saw a moment of weakness at Activision and decided to jump in. And Bobby Kotick, after he got the call, he started calling other companies and was like, hey, would you guys outbid them? But nobody was interested. Only Xbox wanted to do it. This was also a time, end of 2021, beginning of 2022, when interest rates were incredibly low and borrowing money was cheap.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And the economic climate was much different than it was even a year later. So that also played a role in this whole thing.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
The entire video game industry was just so short-sighted. It's pretty wild. They made this massive purchase. I think they saw an opportunity. Activision Blizzard's market cap had fallen pretty hard. I think they went from a high of like over $100 per share to something like 70, maybe even 65, at the point that they were ultimately purchased by Microsoft.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
It seemed like a good move, I suppose, to Microsoft at the time, and to fit into their strategy of just looking around and saying, hey, we haven't been able to compete with these other big game companies by making games ourselves, so we're just going to gobble up everything and try to make games with other people's talent.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Whether or not that was a successful acquisition, I think, still remains to be seen. Yeah.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Yeah, it makes sense. It's true that they didn't have a presence on mobile. They wanted to put together an Xbox mobile store. They wanted to compete on as many fronts as possible, because yes, I believe the PlayStation 5 has outsold it twofold at this point, PlayStation 5 being the biggest rival to the new Xbox. And so they're not in a position where they can compete on that front.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
So yes, it definitely makes sense that they would want King. I certainly don't think it was just about King. Obviously, having Call of Duty and World of Warcraft, those are two pretty substantial... revenue drivers for a company like Xbox.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And looking at the numbers, I mean, on recent Microsoft earnings, they've reported that any growth in the Xbox business essentially has been attributed to Activision, Blizzard, that part of it. So it's not just King that is giving them growth. If you're forward-thinking, you might be like, well, mobile's the future, which, I mean, I think that's arguable.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And mobile has a tendency to be concentrated of the top, top games are making the most money. And for everybody else, it's much harder to penetrate. But yeah, I mean, definitely a big part of it. King was definitely the kind of the quiet moneymaker that came along for the ride.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I don't know. I mean, Xbox's strategy is incomprehensible to most outside of Star Wars. That's where I was getting to. Do you see the strategy now that they have Activision Blizzard? It doesn't make any sense. They can't even be consistent in their messaging about which games will be exclusive to Xbox consoles and which games will be also released on PlayStation. They're
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
changing their minds every few months, it seems. I don't know what they're thinking, and I don't know how it all fits in. I mean, from one point of view, it's like, well, this is going to make us a lot of money. At some point, we will break even on this acquisition. So it was worth it on that front. We're making so much revenue from, wow, Call of Duty, King, maybe it's worth it.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And from a pure kind of math business perspective, that carries some weight with me. This idea, I think CEOs tend to think in these kind of grand strategy terms where it's like, we must have a branch on mobile. And that's the way you appeal to investors, right? It's not by saying we are making more money than we did last year.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
It's by saying, here's our AI strategy and that's what boosts your stock 10%, right? So for them, it's like, we need to be talking about mobile and cloud and blah, blah, blah, blah, all these other kind of futuristic buzzwords that make investors happy. Whereas if you look at the numbers, it probably makes sense, but like the overall grand strategy, whatever.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
So Microsoft gets into mobile and maybe they make some money there. What does that mean for Xbox owners? What does that mean for the Xbox ecosystem? Who knows? Like it's all kind of throwing a bunch of darts at a board and like hoping a couple of them stick.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I think they announced like 650 people in early September. I think that was part of that. This has been a year of layoffs for every single video game company and a lot of tech companies too. This isn't just a Microsoft exclusive problem, but it's certainly a problem for a company that, I mean, within Microsoft, and this is something that we've been reporting on a few times at Bloomberg.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
So Xbox for a long time was given a lot of autonomy and been allowed to do its own thing. And then suddenly Xbox is like, hey, we want to spend $69 billion on Activision Blizzard. And that deal closes and Satya Nadella and Amy Hood and Microsoft are like, how much did you just spend? Let's take a closer look at those P&Ls.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And so there's been a ton more pressure on the Xbox folks over the last year to get
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
super profitable get those profits up and a large part of that is cost cutting and that's why they've been making so many cuts some of them have been more quiet even like there have been a lot of cases of like them not backfilling roles or them asking people to take buyouts and that's been a little bit less like a little bit more under the radar too and also cutting down on travel expenses a lot of those things that companies do and it's like hey we're in belt tightening mode so yes within xbox it's definitely gone to lean times for those folks
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
We need to take another quick break.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
It's not something that people can ever really solve. It's something that's an ongoing conversation, especially in these male-dominated industries. And the video game industry is still mostly men. I think that the most recent stat I saw at Activision Blizzard was they had something like 26 or 27% people identify as women or non-binary. And so there's always going to be something.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I think for a lot of people, the bigger issue at Blizzard was not so much that there was harassment or discrimination because those things... are going to happen at any company of thousands of people, the bigger issue for a lot of people was that HR didn't really do much about it. Or like that people didn't seem to be fired or punished when they were accused of that sort of thing.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Or that people would complain about not being paid equitably and just be told that their problems weren't a big deal or like that it wasn't true, gaslit or told they were making it up or whatever it was. There were a lot of kind of these systemic issues that I think Blizzard had a really poor infrastructure for dealing with. And that, I don't know if it's something that they fixed.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
It's certainly something that has been talked about a lot more. It's certainly something that they've said that they have people coming in to fix, but it's the type of thing where it's difficult to know until there's another critical mass of people all talking about something.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Even with the Blizzard, like the lawsuit, and I get into this a lot in the book, the lawsuit, it had some problems for sure. It was pretty sloppy. It was misleading in a lot of places. You can write anything in a lawsuit complaint.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
So it definitely, it wasn't a hundred percent accurate, but it did capture this fundamental truth for a lot of people, especially women who work there, which is that like, Hey, there are some big problems here and here's my story. And so a lot of people came out in public to tell their stories. And that's what kind of led to this big cultural reckoning for Blizzard at the time.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
You kind of need to have that again at some point and have an ongoing conversation at some point to really know if things have changed or if things have stayed the same. And I think internally, these companies try to have those conversations, try to have big summits where they get into that sort of thing and hopefully leads to more changes than it did in the past.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
But yeah, I mean, for any company like this, you have to just be working at it every day in order to actually make improvements. So it's never a fixed or a done thing. It's always just this ongoing battle.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I think the biggest issue and the core tension, the reason for that tension, like the explanation behind this is that budgets have gotten so big in the video game industry because they're taking so long. These games to make, a few years ago, 10 years ago, 15 years ago, the average time for a game was like two to three years. And now it's like five to six years, which means...
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Hello, Neil. Thank you so much for having me on.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
twice as much of a budget. You're essentially paying your staff for double the time. Now we're seeing budgets in the hundreds of millions. It's pretty wild. And by necessity, these companies have to be publicly traded because they're the only ones who can afford to make those kinds of games.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And if you're publicly traded, you are in service to your shareholders and your board of director and watching that stock tick up. In Blizzard's case, it's really interesting. I big turning point for this company was releasing World of Warcraft, because throughout the 90s and early 2000s, they were really successful, hit after hit, just constantly growing.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
But it wasn't until World of Warcraft that they became an empire. And suddenly they went, over the course of just a few years, they went from a company of hundreds to a company of thousands. Soon enough, they merged with Activision. And for a while, that was good, until the Titan debacle that I mentioned.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And then Bobby Kotick and Activision started applying more pressure because they felt like Blizzard was not delivering, was failing to meet the expectations that they had. And obviously, there are a lot of twists and turns along the way, a lot of ups and downs in that relationship as time went on.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
But fundamentally, you have this company that is faced with this challenge of supporting World of Warcraft, and that means hiring thousands of staff because this game is the biggest thing on the planet. And to do that, you need to operate at a much bigger scale. It's really just growth and scale and size.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And this, to me, the book, Play Nice, is a story about what that does to people and companies. scaling up really does, which I think is a very familiar story in the tech world and in a lot of the gaming world. And the more you scale up, the more you need to look around and be like, oh, okay, are we going to have to be publicly traded and deal with those compromises?
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Are we going to have to bring in VCs and make different kinds of compromises or private equity and watch our company get gutted or something like that? So growth is really fundamentally what it all comes down to. Too much scale.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Yeah, it's funny you ask that because Blizzard's co-founder Mike Morhaime is just like starting to talk about his new company. He started this company called Dreamhaven four years ago. And they just started making the press rounds. They're about to announce their new game. And just a few days ago, I interviewed him and a couple other top people there.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And one thing that I found really noteworthy was that one of the people I was talking to was this woman named Erin, who was the director of the game they're about to announce. And it was like, oh, hey, okay, there's a female creative director here. This is a change from the Blizzard days.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And that's not to say that I've interviewed people there and checked on the culture and made sure that everything's on the up and up or anything, because I haven't done that yet, question mark.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
But even that is just a sign that someone like Mike Morhaime recognized some of the problems and is like, okay, we want an atmosphere where we can give a woman an opportunity here, because it seems like that was an issue at Blizzard. So Yes, absolutely things have changed. I mean, there's been progress overall, like across the industry.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Blizzard also recently got its first female executive producer, a woman named Holly Longdale, who's the head of World of Warcraft now. So there is change very slowly, but very surely. One thing that's happened in recent years is that employees are a lot more willing to call out the BS. A lot of people are willing to take to Twitter and call out their bosses. They're willing to whistleblow.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
They're willing to make a scene within the company on Slack and do all that stuff. And that can have some negatives and repercussions, especially when someone's voice gets amplified, but they're not necessarily telling the truth. They're like a disgruntled employee. But internally, it has led to some real progress, I think, at a lot of gaming companies.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I mean, there's definitely still a Blizzard. They just released this new WoW expansion that people really love. They have this new Diablo 4 expansion coming out in just a few days that is pretty highly anticipated. There's definitely still a Blizzard, even if it's a little bit different than it was in the past.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I think it's more of a big oil tanker than it is the nimble, creative boat that it was back in the day. But that's been the case for a long time. I think there was more optimism under Microsoft a year ago than there is today. Because of all the cuts. And I think being at a company where layoffs are hitting twice a year is just miserable no matter what.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And I think people need to get through that to really just feel like morale is going to go up. But Blizzard also, they have a new president now, Johanna Fares. For the first time, a woman is leading the company. And so that has been... a big deal. A lot of people seem to like her, and it remains to be seen the big picture changes she's going to enact. But a lot of people are hopeful.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
There have been some more recent issues that I think are still not quite addressed, such as return to office. That's a big ongoing conversation because Blizzard made people return to office. And I have stories in the book about people who had to return to office, and then three months later they were laid off, which is incredibly fucked.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
It remains to be seen, and it's only been a year since Microsoft took over, so there's a lot of time left to make these big changes in cultural change, but it remains to be seen what kind of long-term effects this will have.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And something I always think about is when the Activision-Blizzard merger happened, it took six years before problems really started, and they didn't really manifest to the broader company until a few more years after that. So it's hard to really know. It takes a long time before you really know what the repercussions of a massive M&A deal really are.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
It's a fantastic question. It was shiny. Money was cheap at the time. I think being able to make the headlines of, oh my God, Xbox is this powerhouse. I'm sure that was a part of it. It remains to be seen. Like, who knows? Microsoft strategy. It's been such a mess, like Xbox strategy as a whole this year. that it's really hard to tell.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
A lot of people fantasized about, oh my god, Microsoft, they're going to bring back StarCraft and let the Age of Empires people make StarCraft. Or maybe a new WoW expansion will be made by, I don't know, maybe 343, the Halo makers. Maybe they'll get into Overwatch. Maybe Blizzard will make a Halo game. But none of this None of that is real life.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
All of that is just the fun fantasizing that happens when a merger like this occurs. In real life, I think business continues as usual, and we'll see what happens five years from now, or if they just sever Blizzard and shuffle Blizzard off to some other corporate owner, which I wouldn't be super shocked if that happened. Not to say that's a prediction.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
No. Microsoft has gone through multiple rounds of layoffs, and a lot of that was focused on Activision Blizzard. Granted, to be fair, I think at least some of those cuts were planned before Microsoft took over, so Microsoft inherited this process. But still, I mean, when I was writing this book, I filed my first draft around January, so right before the first big layoff.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Yeah. Yeah, yeah, yeah, yeah.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Yeah, thanks so much, Eli. Thanks for having me.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And the original draft ended on kind of an optimistic note, because a lot of people were really psyched about Microsoft, who worked at Blizzard. Because as the book documents, there's this saga of Activision and Blizzard going at it, and them just having totally incompatible values and philosophies about making games, and it caused a lot of problems.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
So a lot of people, especially after the California lockdowns, lawsuit and all of the cultural issues. A lot of people were really excited to be out of the Activision rule, the Activision C-suite. And Phil Spencer came to Blizzard's campus. People were lining up to meet him. He was shaking hands. He was playing their games. People were really jazzed.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And then, at the end of January, Microsoft lays off 1,900 people, including hundreds of Blizzard, cancels one of the big games they're working on, the survival game Odyssey, and everyone's just like, oh, Phil Spencer, it's just another executive. They're all the same. Counting on a big corporation to save us was not a good idea. So yeah, quickly wrote a final chapter.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I emailed my editor, I was like, hey, I think we need to do a new ending here.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Blizzard was the brainchild, really it was the brainchild of one guy named Alan Adham, and he brought along Mike Morhaime. And the two of them, they were both students at UCLA. They were engineering students, and they considered themselves two of the top programmers. They both were really into video games. And they decided, hey, why don't we go and try this? We're young.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
We can do this with minimal seed money. They each took a loan of between $10,000 and $15,000 from their families. Alan, I think, took it from his college fund, and Morhaime borrowed it from his grandmother and eventually paid it back. I think he had the check framed in Blizzard's museum later on, many years later.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And the two of them, they said, we want to start a company that makes games that we like to play. A lot of these gaming companies in the 90s were run by business people and business people who didn't really care about games. They just saw this as a product to sell to children and make a bunch of money. And so these guys were like, we want to make games we really like.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And so for the first few years, they just tried to stay afloat. They took on contracts. They worked really closely with a company called Interplay, which was run by Brian Fargo, who was a high school friend of Alan Adham's and took on a lot of conversion contracts to bring these games to other platforms. So it would be like, we're going to bring Lord of the Rings to Amiga.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
We're going to bring Battle Chests to DOS or whatever it was back then. And then in 1994, two things happened. One is they had a breakout hit, and that was called Warcraft, and that was the beginning of the Blizzard empire and the beginning of them starting to develop and publish their own games.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And two is that they were purchased by a company called Davidson and Associates, best known for making Math Blaster of all companies. So they became part of this edutainment company. That was the beginning of two kind of parallel paths for Blizzard. growing into this video game developer, making franchises and games that people just absolutely loved.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And two, shuffling from corporate parent to corporate parent along the way as they were trying to do the former. And they just kept growing and making hit after hit from there.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I mean, 1990s crunch is kind of a different world from crunch that the video game industry or even the tech industry faces today. Back then, it was just a different dimension. It was your entire life is dedicated to this. And it was tied into the social elements of Blizzard in that everybody who worked there was friends with each other. They all wanted to be hanging out.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
They were voluntarily staying after work just to play games with each other and hang out with their closest friends or like going out to dinner or like playing Magic the Gathering in the halls or whatever it was. So for them, it was work and life were so intertwined that it was hard to separate the two.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And then there were some periods, Starcraft in particular, which was like the science fiction real-time strategy game that they made. That was really brutal. That was like, we are going to work. Every single night, we are going to work. Weekends, this is really tough."
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
To your point earlier, I think that at that point in Blizzard's lifecycle, they weren't facing the same kinds of pressures from their corporate parent as they were a little bit later.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Also, their executive team, Mike Morhaime, Alan Adham, Paul Sams, who came in a little bit later, they were all really good at shielding the company from corporate pressures and saying, hey, if you just leave us alone and let us do what we want, we will make you hits.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
So a lot of the crunch was really, it was either self-imposed or kind of imposed from Blizzard's executive layer rather than their corporate parents, at least at the time. For a long time, they were able to deliver on that promise and really mollify their corporate parents despite having to go through turmoil.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
One of the craziest stories in the book is about Sendent, which was their parent company. So in 1996, Davidson and Associates sold their company to CUC, which was a mail order catalog company. And then a couple of years later, CUC merges with HFS, which is a healthcare company. Of course. And it's all just nuts. And everyone's like, what is going on here?
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And they formed this company called Sendant. And then suddenly, one day, everybody wakes up to this press release from the SEC saying that Sendant was engaged in widespread fraud. And they're like, wait a minute, that's not good. And it turns out Sendant is cooking the books. Their CEO, Walter Forbes, goes to jail, prosecuted by Chris Christie, of all people.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
That's the type of thing that would just happen to their corporate parents in the 90s. It's a miracle that they were able to make any games with the distractions and the craziness that was happening above them.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Well, so those people also grow up and find spouses and children. Yeah, I think Blizzard got better at crunch over time. I think the more deeper-setted issue was that from the beginning, Blizzard was almost entirely men, and working there felt like being at a frat house. And I think that had its pros and its cons for the people who worked there.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
But if you were a woman who came in and worked there, it was super complicated, and you had to try to fit into the boys' club, or you might feel uncomfortable. And there might be all sorts of problems that you run into if you work there as a woman.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And those were the sorts of things that would then bubble up later, especially as people started getting rich and famous because of World of Warcraft, which really transformed the company. And then some of that, some of the kind of the combination of that geekdom combined with fame and fortune, turned some people into self-proclaimed rock stars, and made them do some awful things.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
That, I think, was more of an issue that kind of lasted than the crunch thing. I think crunch was definitely an issue for a lot of people, and during the early days it was especially an issue because a lot of people during various stages of Blizzard's history felt like they weren't being paid appropriately, they weren't getting rewarded for all the crazy hours they were putting in.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
But the kind of the culture of sexism and discrimination that would bubble up and be talked about much later, I think that was a bigger problem that was kind of rooted in that 90s culture.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
Yeah, men in their early 20s.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I think it's both. I think there are a couple of things that are specific to Blizzard.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
I mean, first and foremost, Blizzard over the years became so beloved that when, in 2021, California sued Activision Blizzard for sexual misconduct and discrimination, and a lot of the allegations were about Blizzard, the reason it resonated so strongly, I think, is because Blizzard was so beloved that people were like, oh my god, like... Come on, Blizzard? We love Blizzard.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
It'd be like workplace misconduct allegations coming out of Nintendo. It's like one of the most beloved gaming companies on the planet. So that was a big part of it. I think, yeah, a lot of companies were like this in the 90s. Some changed, some evolved, some didn't, some really struggled to. I think it's really difficult for a company to change its culture.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
And it's especially difficult when you're a company like Blizzard, where tenure is really valued above a lot of other things. Tenure really matters at Blizzard. People used to say, oh, you've only been here for five years. You don't know Blizzard, right? Because there were people who stayed there for 20 plus years. That causes a couple of problems.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
One is that if you're kind of a problematic or borderline problematic person... you're kind of entrenched in the company and it's kind of like, oh, he is the creepy uncle, whatever. That guy's just being that guy. That's one aspect of it.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
The other aspect, and this I think is the most kind of insidious, is that a lot of those people who are entrenched in the company and at the highest levels of the company are men because That's who was there at Blizzard in the 90s. So if you're a woman coming into Blizzard in, say, 2004, and you're like, oh, I love video games. I grew up playing Warcraft. I want to come work at Blizzard.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
This is really cool. It's hard to see a path to promotion and making your way up. And there are a lot of barriers that are in your way because the company is run by men. And that has never changed. Blizzard has been around for almost 34 years now. And to this day, the company has never had a female creative director on one of its games, which is a crazy fact.
Decoder with Nilay Patel
The toxic transformation of Warcraft maker Blizzard
But that's the reality of kind of this ingrained culture there. And it's really tough to overcome that.