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Neither Activision nor Blizzard needed to make Diablo Immortal

Activision-Blizzard generates billions in revenue every year, and didn't need to over-monetize Diablo Immortal for more revenues.

@DeekeTweak
Published Jun 10, 2022 11:15 PM CDT   |   Updated Mon, Jul 4 2022 8:14 PM CDT

Activision-Blizzard had no real need to release the over-monetized Diablo Immortal onto PCs and mobiles; the company already makes enough money.

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Publicly-traded companies have one goal: Maximizing shareholder value, ideally through perpetual growth in revenues and profits. Activision-Blizzard, which remains in the top 5 best-earning video game companies on the planet, is known for its emphasis on live services and monetization. But with Diablo Immortal, the company is pushing its luck during a time when its reputation is at serious risk.

Diablo Immortal is one of the most controversial video games of the last few years. The game features a complexly-layered microtransaction system predicated on even more complex F2P dynamics, which reinforce habits and behaviors specifically designed to keep users engaged and locked into the ecosystem. The game doesn't just have skins, though; Diablo Immortal has multiple microtransaction points that range from buying Legendary Crests to farm endgame gems (gem drop odds are astronomically against players) to buying in-game currency to list your gear on an auction house.

Related:

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Diablo Immortal's legendary gem drop rates per Legendary Crest. The odds of a 5-star gem are 1 in 2000.

Diablo 3 players from 2012 will remember the game's disastrous Real Money Auction House, an early experiment from Blizzard where users could buy--and sell--in-game items for real-world money. It was like eBay for Diablo items. The auction house was massively controversial and removed, leading to the game being rebooted.

Now Blizzard is up to its old tricks, but this time it's not alone. NetEase, the Chinese juggernaut who made $9.8 billion from free-to-play games in 2021, has helped co-develop Diablo Immortal and is teaching Blizzard many new methodologies for live service monetization.

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Activision-Blizzard's annual investor's report shows how live services transformed the company; it made billions before Diablo Immortal's monetization, and it would make billions without it.

The reality is that Diablo Immortal does not need to exist. Blizzard did not need to make the game. Activision certainly didn't need the money, and neither did NetEase. All of these companies make billions of dollars in revenue every year before Diablo Immortal existed.

The chart listed above clearly demonstrates Activision-Blizzard's growth over the years when games like Diablo Immortal didn't exist. We also have earnings data below that shows a breakdown of company revenues.

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Activision-Blizzard made $8.8 billion in 2021 alongside record operating income and profit.

Activision - $8.8 billion

In 2021, a year that coincided with Call of Duty Vanguard missing its mark, Activision-Blizzard generated a record $8.8 billion in revenues--more than it ever has before, even in 2020 when Call of Duty made a massive $3 billion in earnings.

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Blizzard made $1.8 billion in 2021 during a year where its only new game was Diablo II Resurrected.

Blizzard - $1.8 billion

Blizzard likewise made $1.8 billion from its games despite not having released a new premium game release for many years. Diablo 2 Resurrected, a remaster of the old-school PC classic, launched during 2021. Blizzard's revenues have indeed dropped from 2020 to 2021, but not by a whole lot.

It is true that Blizzard's Q1 revenue dropped to its lowest point in the past 8 years during Q1'22, though. Is this the proper response to a revenue drop? Is Diablo Immortal designed to buy Blizzard time while helping buoy--and possibly accelerate--Activision-Blizzard revenues to record levels? It's likely yes to both.

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NetEase is a master of monetization with nearly $10 billion in revenues generated mostly from microtransaction-driven games.

NetEase - $9.8 billion

And NetEase? They've made even more money than Activision-Blizzard without mega franchises like Call of Duty. NetEase is something that Activision-Blizzard aspires to be, at least in the free-to-play live service market. And they aren't alone; Sony is also delving into live service multiplayer games, too.

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As it stands, Diablo Immortal is an experiment to see what works. How much will it make? Who will purchase the content? How far can monetization be pushed before consumers push back?

Remember that Activision-Blizzard is new to mobile games. They aren't experienced in mobile. That's why they teamed up with NetEase for Diablo Immortal, and Tencent's gigantic subsidiary TiMi for Call of Duty Mobile. Activision-Blizzard is attempting to merge Western and overseas gaming economics with its F2P games. Will it work? Maybe.

Diablo Immortal's current state is basically akin to Diablo 3 in 2012. Expect this game to change and morph, but not before millions of gamers have spent millions of dollars on in-game content. Immortal will certainly get its own Reaper of Souls moment where it "redeems" itself, but the cost is still pretty high considering Blizzard is still caught in one of the most industry-shaking controversies of the modern games era.

In short, this game was not necessary for any of the companies involved in terms of relative earnings. It exists to do two things: Teach Activision, and to make money while doing so.

Activision-Blizzard is aggressively chasing growth ahead of Microsoft's massive $68.7 billion buyout of the company. Activision is charging $69.99 minimum for Call of Duty Modern Warfare 2, and plans to release Warzone 2.0 and Warzone mobile in 2022. By year's end, Activision will have three massively monetized F2P mobile games on the market: COD Mobile, Warzone, and Diablo Immortal.

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Derek joined the TweakTown team in 2015 and has since reviewed and played 1000s of hours of new games. Derek is absorbed with the intersection of technology and gaming, and is always looking forward to new advancements. With over six years in games journalism under his belt, Derek aims to further engage the gaming sector while taking a peek under the tech that powers it. He hopes to one day explore the stars in No Man's Sky with the magic of VR.

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