Blizzard Entertainment – The Wisest Storm

Worth USD $65bn, and growing faster than the movie industry, the video game segment has one of the biggest impacts on today’s popular culture (Janson, 2011). In this article, we will have a look on Blizzard Entertainment, one of the innovative publishers that released games which played major roles for the notoriety of this business as well as defining its future path. We will assess how the company makes the correct strategic decision by creating a sustainable growth and relationship with their customers. We will mostly discuss its World of Warcraft (referred as WoW later on) game as it makes 1/3rd of Activison Blizzard’s total revenues (Miller, 2012).

Blizzard’s Value Proposition

The value proposition of Blizzard Entertainment is to provide a 60€ high-quality game to hardcore and casual PC gamers, plus on-line monthly subscription of 15€ for WoW, many hours of immersive entertainment through a captivating virtual environment and a genuine customer experience. The company, as a result, places multiplayer characteristics (interaction and the contribution of these customers through feedbacks) at the front line of their complex social strategy (Miller, Activision’s Careful Social Strategy, 2011) which enhances the games’ value proposition.

Specifically in WoW conducting such social strategy is crucial considering the “time restriction” factor. The particularity of a MMORPG such as WoW is the high switching cost on the customer’s side due to large time commitment. The average player spends 23.4 hours on the game per week and 10.4 hours on Metagame[1]. Just consider the fact that characters can level up from 1 to 60 which means 13-15 days of game-play time. It equals to play 2 hours per day during 5 to 6 months.  As a consequence, players can reasonably play one MMO game at the time which makes the choice of the game crucial. As a result, capturing, as early as possible, subscribers is one of the most challenging endeavors.

Thanks to Blizzard lore, the company could rely on an eager early demand to continue the plot that was developed by the previous titles of the Warcraft franchise. It drove the game to become an instant market hit and Blizzard the clear market leader of the MMORPG segment. Moreover, Blizzard Entertainment further success on this retaining comes from a deep focus on customers’ nurturing thanks to Battle.net (its online gaming service), the management of its community and the fact to share with their customers the fantasy world the company has created around their games.

Decision-making Process

One of the key success factors of Blizzard Entertainment lies mostly on the establishment of a genuine customer relationship management strategy and the nurturing of its core community around its titles. Meanwhile, both sides can come up with fresh bright ideas and participate to make the decision-making process unbiased and accurate. One could explain this achievement to make right decisions by the theory of the Wisdom of Crowds by James Surowiecki.

According to the author, crowds are better at making decisions rather than a small group of experts. However, four criteria are required for the crowd to outperform individuals (Surowiecki, 2005).

The first one is the diversity of opinion. In the case of Blizzard, gamers and employees can come from any backgrounds, departments, cultures and ages so these persons, who are linked with each other by their passion for gaming, are likely to own private information and rely on it.

Independence is the second one. It means that no member of the crowd is influenced by others’ thoughts. In Battle.net Forums, opinions are exchanged on a virtual platform through virtual ID, no one is physically interacting with another member which makes it difficult to be heavily influenced by others’ status as the communication process is more straightforward and less subject to feelings and emotions that tends to forge biased interpretations.

The third criterion required is decentralization. Built by gamers, the firm’s organizational structure is rather decentralized. For example, the R&D department has various teams working on individual projects. By operating as such, the company empowers employees to specialize on their field and increase their productivity. Staff members are also free to set their own way of how they will realize the different steps, requirements of their project.

The last criterion is aggregation. Information aggregation is actually one of the purpose Battle.net has been designed for and his clearly outlined in Blizzard Online Privacy Policy: “Blizzard may use this information to generate aggregate statistics about our user community […] may enhance or merge the information collected at a Blizzard site with data from third parties in order to update your contact information, perform market analysis, or improve our products, service, or systems.” (Blizzard).

In the end, we can say that the company outperforms its competitors because its decision-making process regarding its overall CRM and game strategy is designed, according to the theory of the Wisdom of Crowds, to be the most effective one.

Conclusion

Some critics may argue that despite these arguments, figures show that the number of subscribers keeps falling (Blizzard). It is correct, since 2010, the company has witnessed subscription to erode after they reached a pick of 12 million on customers (10.2 million today).

Blizzard’s CEO Mike Morhaime stated that it was mostly due to a drop-off in Asian markets (Plunkett, 2011). Generally, one can also add that subscriptions have fallen because new MMOs appeared on the market (Warhammer, Guild Wars…). It has gone up again when a new expansion set was released and because some players come back because WoW still entertains more today than its competitors. However, it plunges down again when this new content has been swiftly digested by some of those hardcore gamers (Bosier, 2011).

One could argue that the fall seems to be due to a deeper issue: an unclear strategic positioning: the firm by wanting to please to more and more profiles of gamers loses a bit of its core customers. The level of difficulty has been gradually going down and new contents are being consumed faster than the first expansions. Another example is the next expansion set that sees the appearance of a new race that strangely looks like Kung-Fu Panda. Blizzard appears to pursuit the fulfillment of all the masses. But perhaps, the downfall could also be merely explained because the game is just… getting old. The life cycle of a standard video game is supposed to be around 12 months no more, but World of Warcraft, also due to its MMO nature, has been active since… 2004.

Whatever the reasons, Blizzard’s COO Paul Sam declared on December 11th 2010 that teams have already been working under a new MMO since 2007, its codename: Titan. It is supposed to be “a different game that will expand player’s gaming experience” (Goldman, 2011). Needless to say that the way their decision making process is structured must have greatly influenced the structure and features of this upcoming game. As you can see, the company did not wait for its best-seller to decline to wisely prepare its future on the MMORPG segment through a game that is likely to take, once again, the whole industry by storm.


[1] Metagame refers to the involvement of gamers into indirect activities that revolves around the main gaming experience (the back-office): reading forum, get involve in chat community, trading…

Photos by  Djtyrant

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