The toxic transformation of Warcraft maker Blizzard
53:36 Share

Think scaling A I is hard. Think again, with watts and x, you can deploy A I across any environment above the clouds, helping pilots navigate flights and on lots of clouds, helping employees automate tasks on prem, so designers can access proprietary data and on the edge, so remote bank tellers can assist customers. What's the next works anywhere so you can scale AI everywhere?

Learn more IBM dot com slash. What's the next IBM? Let's create support .

for this episode. De comes from the current report from data privacy to the future of TV retail media and beyond, the world of digital marketing is constantly in flux, so how can you keep up? Well, the current report is there for you each week.

Marketing leaders in the cutting edge give you the latest insight. So if it's creating a buzz, you'll be talking about IT so described to the current report. Wherever you get your podcast .

support for the show comes from alex partners. If you're in the tech industry, wondering how artificial intelligence is going to affect your business might seem like the new Normal by now. Alex partners is a global consulting firm dedicated to helping you navigate the changing headwinds of AI without getting lost in the noise.

Learn how your business can navigate A I while making sure your strategic initiatives are aligned by reading alex partner's latest technology industry insights available. A W W W dot alex partners dot com slash box that's W W W dot A L I X partners dot com flash B O X. In the face of disruption, businesses trust alex partners to get straight to the point and deliver results when IT .

really matters.

Hello, welcome to decoder. I'm in like a tel editor and chief of the verge, and decoder is my shot about big ideas and other problems. Today i'm talking to Jason trial, a bloomberg journalist, and auto of the new book playing nice the rise fall in future of blizzard entertainment, don't a blizz you know its games, the studio behind aircraft, the ababa and overwatched, more than thirty years old, and it's achieved a kind of legendary status.

At the same time, lizard has become emblematic of many of the video game industry y's worse tendencies, from shareholder pressures to prioritize monitise ation over creativity to the deep sexism that still private so much of gaming today. Jesson's book is out on october eighth, and IT is an incredible detailed accounting of how blizz started grew into one of the most beloved and most controversial companies in the world of video games, and then eventually became a victim of its own mismanagement. Oh, and there are a series of chaotic c deeply culture clashing acquisitions along the way, culminating with microsoft closing its deal to buy a combined company known as activision lizard last year in the biggest acquisition in microsoft history.

Because you'll hear Jessie say the story of buzzard really revolves around two central themes. One is the inherent attention that exists between art and commerce, particularly commerce at scale. Wizards journey from small startup in subsidiary of microsoft with thousands of employees.

Well, that's been about as close to M A. Hell as you can imagine. In particular, Jason goes into detail about how emerging with activision, the company behind call of duty, set lizzard on a collision course that would rob IT if so much of the creative agency that allowed IT to flourish in the unities.

The other big team is how industries, an intensely insular fenders like gaming, often have deeply problematic workplace cultures that take root from the very beginning and refuse to let go. That makes these companies is almost impossible to change. Without industry shaking up, people will, instead of california, filed a massive sexism and discrimination lawsuit against activation and twenty one a moment that would change the course of the company and precipitate its sale to microsoft the next year.

Activision loser in ccf formia settled that suit in twenty and twenty three, shortly after the microsoft al closed. There's a lot knowing on here, as you'll hej and say, the story of buzzards is a quintin sentimentale about the perils of capitalism, about what growth in scale due to a business, especially those in the business of making art in the compromises that have to made along the way to keep all that money flowing. It's also a cautionary tale about a fundamentally creative industry that has many times in history, orderly failed to make room for more diverse voices, creating a ticking time bond at the heart of even the most beloved institutions.

Jan trial, you are an investigative journalist to covers the video game industry for bloomberg. You have a book out next week called plain ice, the rise fall in future of blizz entertainment.

Welcome to the coder. And I think you so much for having me on.

i'm very excited. Talk to you. I don't if you've caught this, but in our coverage of whatever is going on the exhibition lizard and microsoft IT IT feels like microsoft accidentally caught not the right prize.

They were very hard to make a mistake. That is my feeling. And I it's exciting to you because your book is just incredible detailed explanation of this like giant merger company, just getting even bigger merger in the cultural class within IT. It's like very it's a perfect IT doesn't seem a year into IT like anyone has had a good time.

No, microsoft has gone through multiple rounds of layoffs, especially a lot of that was focused on activision lizard. Granted, to be fair, I think some of at least some of those cuts were planned before microsoft took covers that micros inherited this process.

But still, I mean, when I was reading this book, I really I filed my first draft and like around jan, where is that right before the first big layoffs, the original draft ended and kind of an optimistic no, because a lot of people really sick about microsoft to worked a blizz because as the book documents, there's this saga of activision and blizz going at IT and then just having totally incompatible values and these about making games. And that caused a lot of problems. So a lot of people, especially after the california los IT and all of the cultural issues, a lot of people were really excited to be out of the activision rule, the activision season and fills.

Fca came to lizz campus. People were lining up to meet him. He was shaking hands. He was playing their gains. People were really jazz.

And then at the end of january, microsoft lays off one hundred people, including hundreds of blizz councilors. One of the big games are working on the survival game auto sa. And everyone is just like, oh, fills meter.

It's just another executive. They're all of the same. Counting on a big CoOperation to save us was not a good idea. So yeah, quickly wrote te, a final chapter. I email the editor, OK, who's to doing the ending here?

I want to come back to microsoft what happens now in the rational for that big acquisition and whether that is played out but IT just occurring, as I was reading the book. It's hard to talk about all of that unless you actually take the time to understand what blizz was its culture, what you just mentioned, its big fight with activision culture after those companies merged and then how that whole ball of chaos ruled itself in the microsoft.

So let's start with blizz, which is now division of microsoft, never shrinking division, microsoft. But IT used to be a behemoth. H how does this company start?

Blizz was the brainchild, really was the brainchild of one guy, alan, at him. And he brought along mike Morgan and the two of them. They were both students at U.

C, L. A. They were engineering students, and they consider themselves two of the top programmer. They both were into video games.

And they decided, hey, why don't we go and try this? Or Young, we can do this with minimal seed money. They each took a loan of between ten and fifteen thousand dollars from their families.

Alan and I think, took her from his college phone. And more hard, like bara from his grandmother, eventually paid IT back. I think you have the check framed in blizzard museum later on, many years later.

And the two of them, they said, we want to accompany the games that we like to play. A lot of these gaming companies in the nineties were run by business people. And business people who like didn't really care about games.

They just solve this as a product to sell their children to make much of money. And so these days are were like, we want to make games really like. And so for the first few years, they just tried to stay a float.

They took contracts. They work really closely with the company called interplay, which was run by brian argo, who was a high school friend of alan hms, and took on a lot of version contracts to bring these games to other platforms. So I would be like we're going to bring lore of the rings to omega.

We're going to bring battle chest to the dose or whatever. IT was back then, a man in one thousand nine hundred and ninety four. Two things happened.

One is they had to break out hit. And that was called warcraft. And that was the beginning of the bizer empire, and the beginning of them starting to developed and publish their own gains.

And two is that they were purchased by a company called David sin and associate, best known for making mass blaster, all companies that they became part of this entertainment company. That was the beginning of two kind of parallel pass for was a one growing into this video game developer, making franchisees and games that people just absolutely loved. And two suffer from corp. Parents and corporate parents along the way as they were trying to do the former, and they just kept growing and and making head after head from there. One of the .

tensions that is just very clear, even from that description, but flushed out in the book, is you have a bunch of nerds. You are just excited to make him so a bunch of creatives, and they are seemingly uninterested in what that means to run a good company.

So then they just bring some people are they sell themselves to someone else who will be interested in that and then there's a culture war or right, like you should make great product on schedule. We should make fun products. So we want to make, you should make sequel.

So all of the stuff, and that is kind of just express sed in these early years through punch, right? Even from ninety four to two thousand warcraft, warcraft to starcraft, the O T O to in your book, you have IT all kinds of reporting. This is just excessive cunt.

They are just working all the time and it's their company is. So it's fine, but this stays the culture. My reading habit is like they're just a bunch of kids. You want to have fun making video games. And so the work themselves to death and in the suits like.

so this is how you work. I mean, I and ninety crunches kind of a different world from crunched is even the tech industry faces today. Back IT was just a different dimension.

IT was your entire life is dedicated. And I was tied into the social elements of blizzard in that everybody who work there was friends with each other. They all wanted to be hanging out.

They were voluntarily staying after work. Just to play games with each other and hang out with their closest friends are like going out to dinner, like playing magic, the gathering in the holes, or whatever IT was. So for them, IT was work and life was so intertwined that IT was hard to separate the two.

And then there were some periods, starcraft ts, in particular, which was like the science fiction real type strategies 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 to your point earlier.

I mean, I think that like at that point of blizz life cycle, they weren't facing the theme kinds of pressures from their corporate parent as they were a little bit later, and also their executive team, like more ham adham paul sam, 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 hit. So a lot of the crunch was really IT was either self imposed or kind of imposed from blizzard executive later rather than their corporate parents, at least at the time.

For a long time, they were able to deliver on that promise and really modify their corporate parents despite having to go through you like turmoil. One of the crazy story in the book is about sending, which was their parent company. So in one nine hundred and ninety six, David and associate sold their company.

And to see, you see, which was a male order catalog company. Then a couple years later, see, you see, merging with hfs, which of the health care company, of course, ll just nuts. And everyone like what is going on here.

And they form this company called senate. And then suddenly one day, everybody wakes up to this press release from the c saying that senate was engaging widespread fraud. And they're like way a minute that's not good.

And that turns out sending is cooking the books their CEO waterford goes to jail, prosecuted by cracking of all people. That's the type of thing that would just happen to their corporate parents in the nineties. It's a miracle that they were able to make any games like with the the distractions. And the crazy is that was happening above them.

This is the thing that I focused on is IT feels like know you started a company. It's a bunch people who want to work together, your first hundred or your first thousand employees, that's their whole lives. And then you build a culture around working twenty four, seven with your friends.

And that thing is inherently unscalable. Your next hundred or your next thousand employees might have their own lives. And so then demanding if they worked as hard as that, the initial wave of the people who chose this life leads just sort of inaccurate ly to weird labor issues and weird cultural issues is that you're read on a blizz well.

So those people also grow up and .

and five children like.

yeah fine passes and children, yeah I think blizz got Better at crunched over time. I think the more deeper seated issue was that from the beginning, blizz was almost entirely men and felt like working. There are felt like being A A fat house. And I think that had its pros and its cons for the people who work there.

But if you are a woman who came in to work there, IT was super complicated, and you have to try to fit into the boys club, or you might feel uncomfortable and and there might be all start to the problems that you run. If you work, there is a woman. And those are the sorts of things that would then bubble up latter, especially as people started getting rich and famous because of world of aircraft, which really transformed the company.

And then some of that, some of the kind of the combination of that dick dum, combined with fame and fortune, turns some people itself for claim blocks starters, and made them do some awful things that I think that was more an issue that kind of lasted than the crunch thing. I think crunch. Currencies defining issue for a lot of people.

And during the early days, IT was especially in issue because a lot of people, during various stages as a blizzard history, felt like they weren't being paid appropriately, they weren't getting rewarded for all the crazy hours they were putting in. 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 ride in the nineties culture.

You have a lot of hints about this. And through the early chapter is the book there's stories about looking import in the office and being a boy's club and basically men being men in office unchecked by the cultural yeah.

men in the early twenty in .

the nineties is not a great time. Is that all just the this is the ideas and this is what I was like is is something specifi C2Blizz in tha t mom ent? The combination .

to I think it's both. I think there are a couple of things that are like specifi C2Blizz. I mean, first and foremost, blizz over the years became so beloved that like when twenty twenty one california sued, activision posted for like sexual conduct and discrimination.

And a lot of the allegations were about lizard. The reason that resonated so strongly, I think, is because blizz was so beloved IT that people were like, oh my god. Like come on blizz, but we love lizer IT be like workplaces conduct allegations come out in the tender.

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 nineties. Some change, some evolved, some didn't. Some really struggled to. I think it's really difficult for a company to change its culture, and it's especially difficult when you're company like lizards. Ten years is really valued above a lot of other things.

Ten years is really matters ebl zor, if you're like people used to say, oh, you've only been here for five years. You don't know, you don't know who is right? Because there were people who stayed there for twenty plus years. That causes a couple of problems. One is that if you're kind of a problem matic or borderline problematic person, your kind of entangled in the company and it's kind of like, oh, he is the creepy uncle, whatever that guy is just being that guy.

That's one I like to IT 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 the highest levels of the company are men, because that who was they are a blazer, the nineteen. So if you are women coming into liza, say, two thousand four, and you're like, all I love video games. I grew playing word craft.

I want to come work a buzard. 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, in your way, because the companies are one by men.

And that has never changed because is been around for most thirty four years now into this day, the company has never had a female creative director on one of its games. So which is a crazy fact about that, the reality of kind of this ingrain culture there. And it's really tough to overcome that.

We need to take a quick break for effect.

Think scaling AI is hard. Think again with watts and x, you can deploy A I across any environment above the clouds, helping pilots navigate flights and on lots of clouds, helping employees automate tasks on prem, so designers can access proprietary data and on the edge, so remote bank tellers can assist customers. What's the next works anywhere? So you can scale AI everywhere? Learn more IBM dot.

Come slash. What's the next IBM? Let's create support .

for the show comes from the refinery. A domino location and atmosphere are key when deciding on a home for your business. And the refinery can be at home if you're a business leader, specifically one in new york, the refinery, a domino is an opportunity to claim a defining part of the new york cy style.

The refinery domino is located in Williams s. Burg berg, lin and IT offers all the perks, animated ties of a brand new building while being a landmark address the dates back to the mid nineteen century. It's fifteen floors of classic modern office environment house within the original urban artifact making get a unique experience for inhabitants as well as the wider community.

The building is outfit with immersive interior gardens, a glaston ed to paint house lounge and a world class of space. The building is also home to a state of the r equal ox with a pool and small world round restaurants and exceptional retail as new yorkers return to the office, the refinery, a domino, can be more than a place to work. IT can be the magnetic hub fit to inspire your team's best ideas. This is the refinery that and my see for a tour.

think scaling A, I is hard. Think again with watch and x, you can deploy AI across any environment above the clouds, helping pilots navigate flights and on lots of clouds, helping employees automate tasks. On prem of designers can access for prieta data and on the edge, so remote bank tellers can assist customers.

What's the next works anywhere so you can scale AI everywhere? Learn more IBM dot com flash. What's the next I B M? What's create?

But back with blimber er journalist ration trial talking about his book playing ice in the evolution of the gaming giant before the break, we covered lizards beginnings in the nineties and how its workers lure was deeply rooted in the sexy boys club atmosphere of the game. And three at the time, that in turn promoted a pretty poor worklife.

BaLances dominated by excessive crunched IT also ensured the only people who have got promoted to positions of leadership were men in the twice who hung out eight and even slept in the office virtually all hours of the day. These issues would prove very difficult to fix, and they would only continue to fester as pleasure became larger and more diverse to that in a little bit. J and I also talked about bizarre il faded ownership saga.

So the company had to survive under a series of increasingly bizarre m, an ideal with businesses that had almost nothing to do with making art. Is you're right to hear Jason explain this. Early years of lizard, when I was owned by the makers of math cluster, were a blessing, perhaps the only in last time in the history, the company where IT wasn't constantly under pressure to compromise on its creative ideals to make a set of new owners more money. So activision shows up why sell division after .

the send in tobacco back in one thousand and ninety eight, blazer, one of getting sold to this company called the vi, a french water company, which again, going from a male order catalog to like this merger with a health company to like a french utilities company. There's just like what is going on here. So they're part of a veni for a little while.

The vi wind up with this gams division of vi games. This is back when they were also like involved in universal of a any had this whole entertainment strategy. Then their CEO got in all three of trouble for this proposition of funds. And that sort of thing, you know, as as the cycle continues, basically evvy went up in a ton of debt, billions and debt, and was just facing all sorts of problems. And they were like rumors and the news every year about how they were in trouble.

And they were onna sell the games division and IT was really not pleasant to be there to be part of lizer because you're just like, man, this sex were making on this cool stuff and like we have no idea is going to happen to our company at one point. Like more hyman, his executive crew even talked about like, can we buy out blizz? What would that look like? Which is a fun alternate history speculation there.

But anyway, so two thousand and seven is when the vi games announced they're gonna merge with activities. So it's not to buy out. It's a merger and that becomes activision blizzard.

Blizzard like the crown role of of any games at the time. IT seemed like a really good fit. And I think from the blizzard, IT was like, okay, we ve gone through all this corporate turmoil.

Here is an activision. There were of those successful video game companies on the planet, and the book planes can tracks the history, like the rise of biotic and the history of activision. We can work quality together.

And also activities really good on consoles were a PC gaming company. This is actually a really good potential relationship yet. And IT is for a while, for a few years, things go really well.

Blizz is firing on all cylinders while is growing every single year, and things seem to be going quite well. Blizz always delivered on that promise for twenty years. They delivered the promise you leave us alone. You give us time less to lay the games a few times, and we will get you hit no matter what. And that changed in two thousand and thirteen when they cancelled this project called tighten, that was promised as the successor to world of aircraft.

And when tighten was cancelled, that changed everything for the company because then activision lizard, run by Bobby koi, could look over and be like, k, you promised us that you would deliver non stop hits if we let you have all the independence and autonomy that you IT and you did IT and you fail you. You throw eighty million dollars into a fairness so we can give you that same lever of autonomy anymore. And they he didn't directly save 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 are like, we need to get some adults in that room here. And what they want to be doing is they have lizard higher, a new CTO and a new CFO. And for the CFO position, they wind up recommending the guy who somebody could because the second command, Thomas tile and Thomas tile knows this guy from his d said printer in gamble named arman zs and arman's urs, that comes in as the new blizz CFO.

And he is not somebody that a lot of blizz folks get along with because he comes in and he's like, why can't we treat these games like dippers and soup and detergent and just ship up and start a new factory to make more of them? He has never made games before, like he comes in with a very different perspective. If he doesn't really understand video game fence and he tries, he finds a little bit of time playing world of or crafty, he tries to to get IT, but he just rubs people the wrong way within blizzard.

And at the same time as that happening, activision is applying more pressure from above on the blazer executive circle and IT. All really IT really starts hitting ahead around twenty seventeen and twenty eighteen to the point where mike more high, who is this beloved CEO a blizz and the cover of the company, he resigns and he writes a letter and email to Bobby c, towards the end of things, I got a hold of equity from in the book. He's like, we need to set boundaries between activision blazer and blazer between the parent company at us because you guys are like interfering with our Operations.

And he says is very more politely but but like basically that you guys but we need to preserve our independence, which IT seems like activision is not interested in doing activision very much once to come in and make everybody work the activision way. And so the activision way, I think I should back up and and explain here for a second, is the Bobby koc way, which is to treat video game franchise, as, in his words, products to be exploited, quote and quote. And what that means is everything needs to about once a year and minimum more than once a year, ideally, but ad minimum once a year.

And you look at all the franchise, the exhibition is had. And that has been their strategy. Guitar hero, tony hawks, proskauer, sky landers and most of all, clive.

Duty call duty is only when it's worked for all the others just died unceremoniously. But because he works so well with color duty, activision is turned into this mega corporation. And so that is the kind of activision mental is like commercial takes priority over development.

We see games as products like 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 of every year. And blizz is like the opposite.

Remember from the beginning, lizards have been like, you give us time. We want time to, like, spend on this art. Critics of lies would be like, hey, you guys are really abusing that notion because nowadays, by this point, mid two thousand and tens, like granted thousand and eight, they've been working on projects. Obvious ly tighten was the big one that was like six years and development.

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 faster than blizz a blizz a mobile game take four, five, six years in other companies that could take six months, please are people would argue, well, that's how we make the best games in the world. That's never released a bad game, activision. People would be like, yeah, but we got shareholders and cordless to hit and we have a plan. And if you tell us this game is gonna out on this day and then you failed to deliver, that screws us over because our investors don't like that and our sock might take. So it's really this fundamental divide that comes ahead with more homes, resignation and from their activision really starts taking over.

So there's this culture class, which an activision blizzard seems like activision sort of wins along the way they buy king, which makes Candy crush. Once you have that diversification, shouldn't the pressure come down like literally Candy crush whales exist? That is the biggest piece of apple services revenue outside of the google search deal. Shouldn't that bring down the temperature and say, okay, go, you can make some art.

It's when you say that because I think, uh an argument, a lizzard all the time that people like more like more high and like his c sweet would make is if we delay again. One of the reasons are part of this massive company is so like something else can help for this laughter, like you guys save the quarter this year and then maybe we can save the quarter next year and that sort of thing.

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. A lot of just talk about lizard fAiling to deliver on fans, explications fAiling to live up to what fans hope for. The biggest point of contention, I think, was over the world of workflow, and how world of workflow expansions each took two years to make.

And that roof, the activism of people crazy, because blizz would say we would love to speed applicators of this. People love expansions. We want to get one going every single year. And they tried all sorts of things to make that and activation.

People would say, well, why don't you just move everybody to the wild team? Why don't you put thousands of people on the world team? And but there will be like now, we want people experimenting with new things. We want to give our talent agency and deciding what they want to do.

And activation was like, why? Well, that isn't makes sense. Ly, we just have everybody on color duty here.

And that was about to attention for a very, very long time because lizzard was not able to speed up development of ow expansions. Activision said, people at the problem hire hundreds of people and make that work. But I 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 after that took off buzzer is trying to make a equal. Activision was like through more people. The problem this was like, no, we don't want to do that and on and on the .

battles minds. So you've got this company is a war with itself on for quite some time. And then the cultural issues come to a real head, right in twenty twenty one, say to california sues activision blizzard, the allegoric culture of good Constance, sexual harassment. Everyone's lawyers were reminded that case was eventually dismissed. And in large chunks and modified.

I was setting settle for fifty five lion hours.

was settle thirty five thousand dollars. That while three journal had an article saying that biotic knew what was going on, he would tell you that he did not. And that was reporting in his place.

There were petitions to have executive changed, and the microsoft basically soop s into this mess, right? All stuff is happening in twenty twenty one, late twenty twenty one, early twenty twenty two. Microsoft is like, we're just going to to buy this and fix IT. All the reporting at the time made IT seem like they saw this huge important game bubble er in turmoil and they're like, oh, this is our in is that basically what happened?

They certainly saw an opportunity to get activision lizard at a discount, although wasn't too much of this time in ty nine billion dollars as it's pretty .

wine and it's one of the gest stations .

in biggest history. The video story, yeah, I mean, there was IT was pretty titanic. I think pills spent on microsoft a long years just coupling IOS. They had bought the fezza of years earlier. Another substantial big game publisher for him.

This was like a big good to be like and we're going to get everything we're going to be like sanoh with this infinity zones and gobble up the entire video game industry. And I think he's saw a moment of weakens activision and decided to to jump in. And Bobby kotick, after he got the call he likes, started calling other companies.

And this, like, would you guys update them? But nobody who's interested, only x box wanted to do IT. This was also a time under twenty twenty one, beginning of twenty twenty two, when interest that rates were incredibly low and barring money, was cheap. And like the economic climate was much different than IT was even a year later. So that was also that also played a role in this whole thing.

like middle pandemic, everyone's inside that for whatever reason, the american business leaders decided, no, not ever go back outside, right? So you a lot of money on inside stuff.

The entire video game industry is just so short side that is pretty wild. They made this massive purchase. I think they saw an opportunity exhibition as the market capet falling pretty hard.

I think they went from a high of like a hundred dollars is per share to something like seventy, maybe even sixty five at the point that they were a ultimately purchased by microsoft. IT seemed like a good movie, I suppose, to microsoft at the time. And if IT into their strategy of just looking around and saying, hey, we haven't been able to compete with these other the game companies by making games ourselves. So we're just onna gobble up everything and trying to make games with other people's talent, whether now there was a successful acquisition, I think .

still remains to be seen. We are to at the time fills penser was on the show, and he he basically made the case. They were they wanted to buy king because all the regulators are looking color duty you to make called duty exclusive.

The x box and bike was like, no, and fill pretty wild. They was like, we need the Candy crush money. That's what I want.

We have no presence in mobile. We've already lost this generation. We don't know it's going to happen in the next one. We need a presence in mobile and banking. Did that ever hold water with you?

Yeah, that makes sense. It's true that they didn't have presence on mobile. They wanted to put together in xbox mobile store.

They wanted to compete and as many friends as possible because, yes, I believe the play station five has outsold to four at this point placation of being the biggest rival to the new x box. And so they're not in a position where they can compete on that front. So yes, they definitely makes sense that they would want king.

I certainly don't think I was just about king, obviously having color dating and world of aircraft. There are two pretty substantial revenue drivers for a company like x box and legally in the numbers. I mean, other on recent microsoft like earnings, they would ve reported that any growth in the x box business essentially has two.

Activision was that part of IT. So it's not just king that is that is giving them growth. If you're like forward thinking, you might be like well, models, the future, which I mean, I think that's arguable.

And mobile has a tendency to be concentrated. The top, top games are making the most money. And for everybody else, it's a much harder to but yeah, I mean, definite a big part of the king was definitely the kind of the quiet money maker that came along for the ride.

The reason, as my question, is microsoft felt for a minute like he was going to make a big bet on game streaming, a cloud service for games that would shop on tvs, on phones, whatever they ran into, whatever apple apple store problems they ran into.

I'll see how those regulatory fights play out, but that bet seems to have diminished so that now owning all the big studios for the big bet on how distribution will change, seems like you just holding in the back in a bush of studios in the second place console. Do you think I just gonna pay off? Do you think they walked away from them by their time?

I don't know. I mean, x box, this strategy is incomprehensible to most.

That's why I was getting to us. Do you see this strategy now that they have activision brither?

IT doesn't make any sense. They can even be consistent in their messaging about which games will be exclusive to x box councils and which games will be also some. They are changing their minds every few months.

IT seems I don't know what they're thinking and I don't know how IT office. And 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 in on that front.

We're making so much revenue from wa color judy king, maybe it's worth IT. And from a pure kind of math business perspective, that Carries some weight with me. This idea, I think C E O is tend to think in these kind of grand strategy terms. It's like we must have a branch on mobile and that's why you appeal to investors, right? It's not by saying we are making more money than we did last year.

It's by saying here's our AI strategy and that's boost your stock ten percent, right? So for them, it's like we need to be talking about mobile and cloud and bob the law, all these other kind of futuristic buz words that make investors happy, whether if you like, of the numbers that probably makes sense, but like overall grand strategy, whatever. So microsoft gets them to mobile and maybe they make some money that what does that mean for x box owners? What does that mean for the xbox ecosystem? Who who knows? Like it's all kind of throwing a bunch of darts aboard and like copying a couple of them.

stick one dark that is constantly getting current. The board is layoff s right. The way that they're making the revenue pay for itself is by making sure the costs are increasingly low.

Even as we're talking, there's warn act notices being fed early this week, like four hundred more people across three activation of their offices are going to be laid off. Is I going to slow down as this industry reached the end of this way of cycle? Are we going na see more .

than I think they announced like six hundred fifty people in at least september. I think that was part of that. This has been a year day off for every single video game company, tech companies too.

This isn't just A 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, a bloom burg. So experts for a long time was lot of autonomy and being allowed to do with something.

And then suddenly x boxes like, hey, we want to spend sixty nine billion dollars on activision and that deal clothes and sit in a delay and amy hood and microsoft like how much you should spend. Let's take a closer look at those. And so there's been a ton more pressure on the x box folks over the last year um to get super profitable, get this profits up in a largest part of that is cost cutting.

And that's why they may make so many cuts, some of them more quiet, even like there have been a lot of cases of like them not backfilling rules or them asking people to take buyout ts. And that's been a little bit less like a little bit more under the rater two and also cutting down on travel expenses, a lot of those things that companies do. And it's like, hey, we're built tightening mode. So yes, within X, X, it's definitely gone to lean times for those folks. We need to take another .

quick buber aspect.

Support for the show comes from the crucible moments, a podcast .

from scope capital. We've all had turning points in our lives where the decisions we make end up having lasting consequences. No one knows this Better than the founders of some of today's most influential in critical moments.

Let's listeners in on the maker break events that defined major companies like dropbox, youtube, roby's, od and more told by the founders themselves. Tune to the season two of crucial moments. Today you can listen at crucial moments, stop com. Or where are you listen to podcasts.

Whether you're a founder, investor or dreamer, you need a bank that truly understands your business inside and out. A bank were more is more, a bank like silicon valley bank, with the strength of first citizens bank, one hundred and twenty five plus y or legacy behind them. S B B is pushing innovation forward like never before.

This means you can gain access to cutting edge financial solutions. Taylor, to your unique means, helping you stay ahead of the curve in an ever changing market. From strategic financing to customize banking services, S V B is equipped to support your growth every step of the way from seed stage through IPO and beyond. Because when experts come together, we can help your vision come to life. Yes, S V B, learn more at S V B dot com lash box.

Support for the show comes from alex partners. You already know artificial intelligence will be transformative. Beyond that, there might be a little bit of a mystery as A I opens the tech industry.

Alex partners is dedicated to making sure your business knows what really matters when IT comes to artificial intelligence because disruption brings not only chAllenges but opportunities in these pivotal moments change. Alex partners is the consulting firm chief executives can rely on with clarity, direction and most importantly, implementation. Alex partners provides a steady hand for your business needs when decisive of leadership is vital. Alex partner spoke with nearly three hundred and fifty tech executives from across north amErica and europe to dig deeper into how tech companies are responding to these changing headwinds. You can see the results and learn how you can turn digital disruption into growth by reading alex partner's latest technology industry insights available at W W W dot alex partners that come slashed box that's W W W dot A L I X partners dot com flash V O X in the face of disruption, alex partners are who businesses trust to get to the point and to get things done when IT really matters.

We're back with blimber er journalist and playing nights of jin shira discussing the circumstances under which blizz became a division of microsoft after nearly three decades of shuffling corporate ownership. We just talked about how a major instigating factor for the game industry is biggest ever acquisition was activision bzzzz toxic culture that included years of alleged sexism, discrimination and harassment.

And inside a plaza, ard itself said something I wanted to talk to just about his activision blizzard fixed any these issues since that big california a lawsuit has microsoft and how far as the industrial large still have to go? Have they solve the cultural problems of sexism problems? They clean that up.

Is that something that people can ever really solve with something? This an ongoing conversation, especially in these male dominated industry, and the video game industry is still mostly men. I think that the most recent that I saw that activision visit was they had something like twenty six or twenty seven percent people identifies women or nubile ary. And so there's always going to be something, I think, for a lot of people. The bigger issue, a lizard, was not so much that like there was harassment or discrimination, because those things, they are gonna a 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, or that people would complain about not being paid equitably and just be told that their problem weren't a big deal, or like that I was and true gasket, or told they were making IT up or whatever IT was. There were a lot of kind of these systemic issues that I think lizard had a really poor infrastructure for dealing with. And that, I don't know if it's something that they fix, is certainly something that has been talked about a lot more, certainly something that they've said that they have people coming into fect.

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 even with the blizzard like the lawsuit. And I get into this one 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 loss you couldn't play. So IT definitely. IT was in one hundred percent accurate.

But I did capture this fundamental truth for a lot of people, especially women, who work there, which is that like a, there are some big problems, and here is 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.

Like 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 change or your 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 I did in the past. But yeah, I mean, for any company like this, like you have to just be working out at every day in order to actually make improvements. So it's never a fixture done thing that was just this ongoing battle.

One of the things that I think about a lot of games and game companies is the tension between we are a bunch of artists who make culture. The culture impacts people, makes people feel feelings. It's art.

We're going to act like artists and rockstars. Oh, by the way, this is also a software company. And these things, these projects take six years, seven years.

The cost billions of dollars, and public company stock Prices are writing on them. Like a rock band doesn't have that pressure, right? Like Taylor swift, ted is a billion dollar corporation, but he gets to make the decisions.

But that on the case for a coming like this, activision IT feels like the video game ministry has been reckoning with that tension for a long time. Blizz is sort of a paradigmatic example of that attention. Is that changed? We like built systems to deal with IT yet or we because IT doesn't seem like anyone's figured that out. But I am curious .

from you're perspective, I think the biggest issue and the core attention, the reason for the attention like the explanation this is that budgets have gotten so big in the ministry because they are taking so long these games to make.

A few years ago, ten years ago, fifteen 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 twice as much of a budget like you're essentially paying yourself for double the time is. Now we're seeing budgets in hundreds of millions. It's pretty wild.

And by necessity, these companies have to be publicly to because they're longer ones can afford to make those kinds of. And if you're publicly traded, you are in service to your shareholder in your body director. And watching that stock take a in buzz case is really interesting.

I feel like the kind of the big turning point for this company was releasing world of aircraft because throughout the nineties and early two thousands, they were really successful, hit after hit, just constantly growing. But IT wasn't until world of workshops that they became an empire. And suddenly they went.

Over the course of just a few years, they went from the company of hundreds of company of thousands. Soon enough, they merged with activision. And for a while, that was good until the titan debacle that I mentioned.

And then vivo, tic and activision started applying more pressure because they felt like lizard was not delivering, was fAiling to meet the expectations that they had. And obviously, there are a lot of twist turns along the way, a lot of options downs and that relationship as time went on. But fundamentally, you have this company that like is faced with this chAllenge of supporting world of aircraft and that have means hiring thousands of staff because this game is the biggest thing on the plane in.

And to do that, you need to Operate a much bigger scale. It's really just growth and scale and size. And this, to me, the book, please, is a story about what that does to people and companies, what 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 like kind of look around and you like go, okay, we're going to have to be publicly traded and deal with those compromises. We're going to have to bring in VC and make different kinds of compromises. Our private equity and watch your company get got IT or something like that. So growth is really fundamentally and what IT all comes down to too much scale.

This criticism of the games industry is A A long one. IT has been around for a while, has been loud for a while. The industry is reacted in different ways.

Gamers try for its worth, of reacted in in different ways in different times. Have things changed? Are we are we making new companies that have have learned lessons? Or we still making companies in the old of buses? Yeah.

it's when you ask that because blizzard cofounder mcmorrow m is just like starting to talk about his new company, started this company called dream haven four years ago, and they just started making the press rounds are about to announced their new game. And just a few days ago, I interviewed him and couple other top people there.

And one thing that I found really no word thy was that one of the people I was talking there was this woman named iran, who was the director of the game there about to announced. And I was like, oh, hey, okay, this is, there's a female creative director here. This is a change from the blizz days.

And that's not to say that i've interviewed people there and checked on the culture, made sure that are like everything, something up and up or anything because I haven't done that question mark. But even that is just a sign that someone like like more time recognize some of the problems and is like, okay, like we want an atmosphere where we can give a woman an opportunity here because IT seems like that was an issue at lizard. So yes, absolutely.

Think of change. I mean, there's been progress overall like a crossing industry. Blizz also recently got its first female executive producer named holy long dead, who is the head of world workout now.

So there is change very solely, but very surely. One thing that 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 whistle blow. They're willing to make a scene within the company on slack and to other and making I was some negatives and repercussions, especially when someone's voice gets amplified. But they're not necessarily telling the truth there like a disgruntled mpl yee. But internally, IT is like to some real progress. I think I had a lot of gaming companies.

There's microsoft corp. Culture, there's activities corcus ture, there's lizard corporate culture, there's the mash up of all of them there are desired to improve. There's the employees wanting IT to improve. What to make of this at the end of this all, they're still a blizz. I mean.

there is still a blizz. They actually they renew this and that people really love. They have new and and just a few days, pretty highly anticipated that.

So we still a blizz, even if it's a little bit different than IT wasn't the past. 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 in 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 they're just layoff there, hitting twice a year is just miserable no matter what. And I think people need to get through that to really just feel like more I was going to go up.

But lizard also, they have a new president. And now johana ferries, 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 remains to be seen. The big picture changes she's going to enact. A lot of people are hopeful.

There been some more recent issues that I think there are still not quite addressed, such as return to office. That's a big ongoing conversation because these are many people return to office. And I have stories in the book about people who have to return to office.

And then three months later, they were laid off, which incredibly IT remains to be seen. And it's only been a year since microsoft vers. So there's a lot of time left to make these big changes and cultural.

But like he remains to be seen what kind of long term effects this will have. And something I always think about this, when the activision lizer merger happened IT sixty years before problems really started, and they then really manifest to the broader company until A 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, like a massive M A .

deal really are. Let's end where we started. But I thought this thing, this chaos, all why was is .

a fantastic question. IT was shining. Money was cheap at the time. I think being able to make the headlines of, oh my god, x box is this powerhouse.

I'm sure that was a part of IT and remains to be seen. cool. No strategy. It's been such a mess like X, X strategy as a whole this year that like it's really hard to tell, like a lot of people fantasized develop, oh my god, microsoft, they are going to bring back starcraft. And like like the age of empires, people make starcraft.

Or maybe a new wow expansion will be made by like, I don't know, maybe three, four, three, the hayloft makers, maybe we'll get into overwatch, maybe blizz maker halo game. But no of none of that is real life. Like all of that is just the fun fantasizing that happens when emerge like this occurs in real life. I think business continue, are as usual and will see what happens five years from now or if they just ever blizzard and shufu lizard off to some other corporate owner, which I wouldn't be super shocked not to say. That's a prediction.

I mean, that is the through line of the book race. Blues are get .

sold yeah yeah.

seeing which the book is playing nice. The rise, fall in future of blizzard entertainment. Jason, it's great book.

Thank you much. Yeah, thanks so much for having.

I like think just shy of taking time to join me and coder today, and thank you for listening. Hope you enjoyed his new book playing nice. The rise, fall and future of buzzard entertainment is out on october eight.

If you are all interested in games or giant companies buying each other, you should pick IT up. IT is the definitive account of the wild history buzard story about modern. You let us know what you thought about this episode.

Really, anything else about to code a, drop us a, you can e mail IT to coder of a, do read the eas, or we can be up actually on threats on that reckless twelve. We also have a tiktok account for as long as a tiktok checked out exactly coder pod. It's a lot of fun to colorful. Sure, your friends subscribe over your pockets. If you can help me out, leave us some five star reviews in those construction, the verge and part of the boxing, the protest network, our producers are kate cox and next or adverse or supervising producers name James that the coder music is that break or said we say next.

With mx platinum, you get priority notify with global dining access by reza, so you can get first tips if a spot opens up at restaurants and compliments to the chef turns into compliments to your platon card. That's the powerful backing of american. I express terms apply during more at h with amx.

Support for this podcast comes from stripe. Stripe is a payments and billing platform supporting millions of businesses around the world, including companies like uber, bmw and door dash. Stripe has helped countless startups and establish companies alike reach their road targets, make progress on their missions and reach more customers globally. The platform offers a sw specialized features and tools to fast track growth like strike billing, which makes them easy to handle description based charges, invoicing and all occurring revenue management needs. You can learn how stripe helps companies of all sizes make progress at stripe dot com, that stripe dot com to learn more strike, make progress.