Since Microsoft's acquisition of Activision Blizzard, Blizzard Entertainment, which had undergone years of turmoil, is gradually regaining its former glory. Freed from the management constraints of the Activision era and integrated into the Xbox system with relative independence, Blizzard's core IPs have recently performed impressively, putting the company back on a growth trajectory.
Blizzard President Johanna Faries recently sent an internal email to employees, rallying them for the upcoming BlizzCon 2026 and revealing that Blizzard has achieved its best performance in recent years within the Microsoft Xbox ecosystem.
Faries stated that BlizzCon 2026 will showcase the team's efforts in recent years and hopes that the event will serve as an important starting point for Blizzard to open a "new chapter."
In her email, she revealed that during Microsoft's fiscal year FY26, Blizzard became one of the best-performing teams within the Xbox Game Studios division, and the past year was also the third-highest revenue year in Blizzard's history.
More importantly, Blizzard has achieved consecutive growth again. Faries stated that FY25 and FY26 mark the first time since FY17 that Blizzard has achieved revenue growth for two consecutive fiscal years.
Among them, the major expansion for Diablo IV and Overwatch were key drivers of revenue growth. Overwatch even saw its strongest quarter since 2022.
"Diablo IV: Vessel of Hatred and Overwatch delivered outstanding performance," said Faries. These successes will help Blizzard further invest in game development, talent cultivation, and future projects.
Over the past decade, Blizzard experienced a significant downturn. As the studio that once defined the PC gaming era, Blizzard's franchises like World of Warcraft and Overwatch faced issues such as player churn and insufficient content updates. However, the situation has been changing in recent years.
Overwatch 2 has started placing greater emphasis on player feedback and continuously releasing new content; while World of Warcraft still faces issues with storyline and production quality, its update pace has stabilized significantly; and Diablo IV has regained player approval by adjusting endgame gameplay and releasing major expansions.
Industry observers believe that Microsoft's "limited integration" strategy for Blizzard following the acquisition of Activision Blizzard may be working, allowing the studio to maintain a certain level of independence while receiving support from Microsoft's resources.
However, Blizzard's recovery comes against a backdrop of increasing pressure on Xbox as a whole.
Microsoft's financial report shows that Xbox's overall revenue dropped by approximately 11% in FY26, partly due to underperformance of major IPs like Call of Duty and Candy Crush. Meanwhile, Microsoft has continued layoffs over the past year, affecting multiple studios under Xbox Game Studios.
Studios including Undead Labs (developer of State of Decay), Ninja Theory (developer of Hellblade), and id Software (developer of Doom) have all undergone varying degrees of restructuring.
Therefore, Blizzard's current growth is particularly important for Xbox. In recent years, Xbox has undergone frequent strategic shifts and faced criticism for insufficient investment in console business and over-reliance on super IPs like Call of Duty, Minecraft, and Candy Crush.
As new Xbox CEO Asha Sharma begins driving business adjustments, Microsoft aims to strengthen Xbox's core business while expanding its gaming ecosystem using its major IPs.
Looking ahead, Blizzard has several major projects in progress.
At BlizzCon 2026, expected to be held this September, Blizzard is set to reveal more details about The Last Titan, the next expansion for World of Warcraft. Additionally, Blizzard is reportedly developing several mobile spin-offs and exploring cross-media projects similar to the Cyberpunk: Edgerunners and Fallout TV series.
Meanwhile, Blizzard is also developing a third-person shooter based on StarCraft, led by Far Cry series director Dan Hay, and the next core Diablo title has already entered development.
For long-time Blizzard fans, the company is undergoing a significant turning point. After years of internal restructuring and IP stagnation, Blizzard's teams are finally gaining room to develop again.
If Microsoft can continue to provide Blizzard with sufficient autonomy and resource support, this legendary studio that once defined the gaming industry may be entering a true second golden age.