As Overwatch and Diablo Money Rolls In, Blizzard Defies the Odds at Xbox
The stars aligned for Blizzard to have a good year in 2026, but that's not the whole story
It's a dreadful time in the game industry, and a dreadful time to be part of Xbox; employees that survived the 1,600 job cuts across the Xbox group in July will now spend the next year worrying that they'll be among the 1,600 still to come. That includes staff at Blizzard Entertainment. Blizzard has had a rough five (or more) years anyway, dealing with the fallout from a sexual harassment lawsuit brought by the State of California, a not-unconnected exodus of senior staff, and significant wobbles from some of its biggest games, including World of Warcraft and Overwatch.
But, in this bleak moment, it seems things are looking up for Blizzard. In an email recently sent to staff by president Johanna Faries (and leaked, surely intentionally, to Windows Central), Faries said that Blizzard ended its 2025-2026 financial year as the top-performing Xbox studio, posted its third-best revenue figure ever, and saw two consecutive years of growth for the first time in nearly a decade.
That means Blizzard is doing better as a business than its erstwhile labelmate Activision, whose Call of Duty had a bad year. It potentially means that it's making more money than Minecraft developer Mojang — although it's questionable whether Mojang is still included in Faries' definition of "Xbox's studio division," since Xbox CEO Asha Sharma recently carved Mojang out to report to her directly. Even if that's the case, coming in second to the maker of the best-selling game of all time isn't too shabby.
It’s a question we rarely get to ask lately: What went right? It's only fair to point out that, leading up to the end of its financial year in June, Blizzard had an exceptionally busy few months. In February, it rebooted Overwatch 2 as Overwatch and delighted the Diablo community by shadow-dropping the first expansion for Diablo 2 in 25 years. In March, it released the World of Warcraft expansion Midnight, adding player housing to the venerable MMO for the first time. And in April, it released Lord of Hatred, the second expansion for its newest game, Diablo 4.
If you're unfamiliar with Blizzard's games, this might just sound like a bunch of DLC and updates. Up to a point, you'd be right. But even among live-service game developers, Blizzard puts exceptional emphasis on its expansions, which have a lot of content and are priced to match. To most intents and purposes, Midnight and Lord of Hatred can be considered equivalent to full game releases. So, yeah, big year.
What's more important than this confluence of activity — which could just be down to scheduling luck — is that all these releases went well. After years of controversy and player prickliness, Overwatch is in the best place it's been since launch. Diablo 2: Reign of the Warlock was a huge PR win. Midnight smoothly sustained an era of consistent, quality updates and strong player numbers for WoW. Lord of Hatred got a much warmer reception than previous expansion Vessel of Hatred (because it was much better). Faries picked out Overwatch and Diablo 4 as the biggest contributors to the bottom line during the financial year, indicating that the studio has built the two newer games into dependable, long-term live-service prospects that can hold their own alongside WoW.
Across all its games, Blizzard seems better aligned with what players want – and with its once-lofty quality bar — that it has done in years. Even from the perspective of a journalist covering the studio's games, it was notable that all four releases got the kind of detailed, accommodating, end-to-end PR support that was Blizzard's calling card in its late-2000s heyday. Things just seem to be working.
Blizzard has been building up to this moment. As Faries pointed out, it's the company's second consecutive year of growth; the previous financial year also saw Diablo 4 and World of Warcraft expansions. For Blizzard, that's a breakneck pace, but the quality is going up with it. Can the studio keep it up? We'll have some sense of an answer next month, when BlizzCon returns after three years away. The reveal of an all-new StarCraft game is expected, along with news of what's next for Diablo, Overwatch, and Warcraft. Blizzard's planners have a fine line to tread — the studio has overcommitted itself before, and ended up mired in delays and project cancellations.
Still, it's reassuring — if somewhat jarring — to hear about a big game studio enjoying prosperity and smooth sailing in 2026. Given how poorly most of Microsoft's game studio acquisitions have fared under its stewardship, it's certainly an outlier, but it might just be that life at the software giant suits Blizzard better than its previous situation. Blizzard has had several owners but has always run itself as a self-contained, self-publishing unit; it suffered its most difficult years under relentless pressure from Bobby Kotick's meddlesome Activision regime. Perhaps Microsoft is willing to give it a little more breathing room to do what it does best.
If only that grace could extend to exempting Blizzard from the coming layoffs, considering its strong performance. That seems sadly unlikely. But Blizzard could well remain the jewel in Xbox's crown for years to come. After all, Sharma says she wants Xbox to have a focus on its biggest franchises, and that's what Blizzard does: build big games, and build them to last.