Blizzard Entertainment

S.W.O.T and P.E.S.T Analysis of Blizzard Entertainment By Shayne Rotte “Blizzard Entertainment is the Premier developer and publisher of entertainment software...By focusing on creating well-designed, highly enjoyable entertainment experiences, Blizzard Entertainment has maintained an unparalleled reputation for quality since its inception.”1 Before the release of its first game, Warcraft; Orcs and Humans in 1994, Blizzard was better known as a third-party developer, mainly creating entertainment software for the different platforms of the time, including MS-DOS and Mackintosh. Since then they have become well-known and respected throughout the gaming world for games such as World of Warcraft and Starcraft. Its Headquarters are in Irvine, California, is a division of Activision Blizzard, and was founded in 1991, when it was called Silicon and Synapse, by Allen Adham, President and CEO Michael Morhaine, and Executive Vice-President Frank Pearce. They have two Offices in Europe, one in Vèlizy, in France, and one in Cork, where they employ approximately 900 people, both of which concentrate mainly on Customer Care side of their games in the Massively Multiplayer Online Role Playing Game (MMORPG) world. S.W.O.T ANALYSIS STRENGTHS The main Strength of Blizzard Entertainments games are their worldwide popularity. Over the last decade, Blizzard has had a record number of back-to-back Number One selling Games, and they have also received several consecutive Game of the Year Awards. It is the world leader in MMORPG's. The popularity of their games means that they have a diverse range of extras, such as Action-Figures, Novels, Board games, and, a Bestseller in its category, World of Warcraft Trading Cards. Their most famous game is undoubtedly World of Warcraft (WoW), an MMORPG that has over 11 Million users worldwide. Available in eight languages, the latest instalment, World of Warcraft: Wrath of the Lich King, became the fastest selling PC game of all time when it sold over 2.8 million copies in the first 24 hours, and over 4 million in its first month, breaking the previous record of 2.4 million sales in the first 24 hours and 3.5 million in the first month, held by its predecessor, World of Warcraft: The Burning Crusade. In fact, the release of The Burning Crusade meant profits in 2007 rocketed by a staggering 58 % from $760 million in 2006 to $1.2 Billion in 2007. The impact that this game has had worldwide has led Blizzard to begin working with Legendary Pictures, the company behind movies like The Dark Knight and 300, on a live-action 1 www.eu.blizzard.co/en-gb/company/about/profile.html

Warcraft movie. Another game of theirs is Starcraft, which has become one of the highest rated real-time Strategy games of all time, which was released in 1998 and was their third number one seller. Starcraft, while not as popular as WoW, has led to the “long-running staple of professional tournament gaming. This is especially the case in South Korea, where the game’s mass popularity played a major role in the birth of the professional-gaming and game-broadcasting phenomena, as well as serving as one of the key drivers behind the growth of the PC-game-room business.”2 Another major strength lies in their recruitment strategy and the care the attention to detail found in their games. Their Research and Development department is made up of 250 designers, producers, programmers, artists and sound engineers, and all their staff are true game enthusiasts, which allows the company to collect feedback more effectively when creating a new product for the gaming world. WEAKNESSES Its main weakness lies in the fact that it has concentrated most of its efforts on the development of the WoW Series. This meant that in 2009 WoW subscriptions and sales made up to 98% of its revenue. This failure to concentrate on their other games, Starcraft and the Diablo Series, means that should WoW lose its popularity, the results could spell financial disaster for the company. The Company also relies heavily on the Online gaming market, and a crash in that sector could also have serious effects on their profits. And, conversely, its popularity can also be construed as a weakness, as it now has little, if any, markets left into which it can expand, as its games are played anywhere there's an Internet connection. One area it could improve is in its image as, although WoW is universally known, it is seen as a game for Computer geeks and nerds, limiting marketability. A more obvious weakness, but probably the least likely to have a serious effect on its profitability, is its name, if you Google “Blizzard”, a number of weather-related articles will also appear. OPPORTUNITIES Blizzard Entertainment has a number of opportunities, as I see it, to expand and increase profits on a global scale. They can expand into the few markets that are as yet untouched by the MMORPG phenomenon. They can also lower subscription costs to attract more people to their games. The creation of a successful movie could lead to a number of profitable spin-offs. It can concentrate on the other two games series, increasing their popularity through new episodes and expansion sets. An opportunity to provide some positive press could arise with the development of a game for the Nintendo Wii, to encourage exercise, while taking role-playing games to a new level, and making you sweat while playing. Its main opportunity would be the development and building of a Theme Park that 2 www.eu.blizzard.co/en-gb/company/about/profile.html

incorporates its three games series, WoW, Starcraft and Diablo, as themes for different areas of the park. I have no doubt that this would be an instant success due to the global following that these games command. THREATS One of the threats to Blizzard is bad press. In 2009, WoW was described as ”more addictive than crack cocaine” by The Daily Mail, after a teenager who had played it for 24 hours non-stop suffered convulsions, while in 2006, Dr. Maressa Hecht Orzach, a Clinical Psychologist and founder and coordinator of Computer Addiction Service, claimed that up to “40% of World of Warcraft gamers were addicted to the game.”3 Another major threat to Blizzard and its games is the growth and increase of other MMORPG's such as Lord of the Rings Online, Dungeons and Dragons Online: Eberron Unlimited, and Vindictus, all of which could “steal” gamers away from Blizzards games. P.E.S.T. ANALYSIS POLITICAL Blizzard's success in the online gaming world depends a lot on the legislation and acceptance from the governments of the countries that they have gamers in. Due to lobbying and/or pressure groups “Governments could implement laws that prohibit production of violent games and having a subversive lifestyle, which could kill off the online-gaming industry.”4 Another way they can be affected can be through the laws for businesses in the countries that they're based in. For example, in China, a country that provides nearly 10% of Blizzards World of Warcraft Subscribers, the company's profits are taking a serious hit as Chinese Law states that a Foreign Company can only operate in Partnership with a Local Company, which takes most of the revenue5. ECONOMICAL Blizzard has hardly been affected by the worldwide recession. In fact, according to Bobby Kotick, CEO of parent company Activision Blizzard, “video games are holding up in the recession because they offer many more hours of entertainment for the amount of money spent in comparison to traditional forms of entertainment. Activision’s own research showed that 18 months ago, about 12 million people played games online with a friend in the U.S. Now that number is 23 million, up 92 percent. About 15 million played online with someone they didn’t now, and now that number is 30 million. And 10 million played with a team or “clan” of friends on a regular basis. Today, that number is 17 million.......online games such as WoW are generating operating profits of 60 percent or 3 www.arstechnica.com/old/content/2006/08/7459.ars 4 www.slideshow.net/zushy/term-project-activisionblizzard-ea 5 www.gamesbrief.com/2009/07/world-of-warcraft-loses-6-million-users/

more, thanks in part to the fact that there is no or little cost of retail distribution.”6This shows that more and more people are joining the MMORPG phenomenon, thereby increasing Blizzards profits. SOCIAL Blizzards games are available almost all around the globe, and in today’s society the gaming culture is growing stronger and stronger, leading to increasing popularity, and profits. However, Blizzard do need to make sure that nothing in their games insult the cultures that they work in, or that the games are suitable for certain age groups, even though, contrary to popular belief, only 25% of MMORPG players are teenagers.7 “World of Warcraft has a thriving community of players, and some of them have formed close ties with each other. WoW observes events in real world, such as New Year's Eve, and allows the players to meet (virtually) and celebrate these events in the game's world of Azeroth. ”8 Strangely enough, many gamers said in a statistical study that “the emotions they feel while playing an MMORPG are very strong, to the extent that 8.7% of male and 23.2% of female players....have had an online wedding.”9 TECHNOLOGICAL With the increase in Computer and broadband speed comes the need to increase the quality of the games that Blizzard provides. With their gamers expecting new or improved products and “patches” regularly, the onus is on the Research and Development department to stay one step ahead of the consumer. Blizzard have managed to cope very well with the MMORPG phenomena, and “interest in the game has increased by leaps and bounds over the years and has surpassed the expectations of even its creators.....One of the major reasons for the game's phenomenal success is its simplicity. Many online games have a steep learning curve, but since World of Warcraft offers simple user interfaces, both novices and experts can play this game and enjoy it equally.”10 The ability to keep the game play simple while constantly improving the graphics and features and overall experience has been a major factor in the success of games like WoW for Blizzard, and it is because of this, among other things, that they are the world leader in the MMORPG and Games market.

BIBLIOGRAPHY: 6 www.venturebeat.com/2009/05/31/biggest-video-game-maker-activision-blizzard-kicks-off-e3-announcementswith-plan-for-financial-domination/ 7 www.askbobrankin.com/world_of_warcraft.html 8 www.askbobrankin.com/world_of_warcraft.html 9 www.en.wikipedia.org/wiki/Massively_multiplayer_online_role-playing_game 10 www.askbobrankin.com/world_of_warcraft.html

www.eu.blizzard.co/en-gb/company/about/profile.html www.arstechnica.com/old/content/2006/08/7459.ars www.slideshow.net/zushy/term-project-activisionblizzard-ea www.gamesbrief.com/2009/07/world-of-warcraft-loses-6-million-users/ www.venturebeat.com/2009/05/31/biggest-video-game-maker-activision-blizzard-kicks-off-e3-announcements-withplan-for-financial-domination/ www.askbobrankin.com/world_of_warcraft.html www.en.wikipedia.org/wiki/Massively_multiplayer_online_role-playing_game www.askbobrankin.com/world_of_warcraft.html