During a Path of Exile live stream session with his wife several days ago, former Diablo II Lead Designer David Brevik (who was also slightly intoxicated since he was occasionally drinking something) quickly opined on the stepping down of Blizzard CEO and President, Mike Morhaime. The discussion began around the 3h31m mark in the following when his wife read through some chat messages. The original VOD has expired but a portion of that stream was shown and discussed in this video.
Brevik mentioned that while he has no inside information, he gave his thoughts on what he suspected to have happened (some of this is probably based on his prior experience with what happened with Blizzard North during the time that Blizzard Entertainment’s parent companies were part of various mergers and acquisitions from the late 90’s into the early 2000’s). Brevik felt that Morhaime was let go (or resigned unwillingly).
He mentioned that the company eliminated their profit sharing plan one or two days ago (from the time of this live stream). Personally, he isn’t specific as to which plan had been eliminated though. The company did eliminate the Blizzard Holiday Plan as noted in ATVI’s 2018 Proxy Statement which came at the request of employees where the bonus amounts were rolled into the employees base pay. A new Blizzard Profit Sharing Plan was instituted in its place (bonuses determined on the profitability of their games). I am not sure at this time if this replacement plan is what he mentioned had been eliminated a day or two prior before this live stream (this information should be known on ATVI’s next filing).
Morhaime himself saw his base pay rise by $369,219 as a result (he was eligible for a 37% bonus based on his base pay). Morhaime also had his own separate profit sharing setup (the Morhaime Profit Sharing Plan) which is determined on Blizzard’s overall earnings. Morhaime earned over $12 million in 2017 which kind of puts into perspective how much money he is walking away from. His stepping down just prior to BlizzCon 2018 was also strange timing but could have also been done to allow Brack a public platform to speak about this leadership change.
Digressing, Brevik went on to say there is “public knowledge going around that Blizzard employees will be making a lot less money as a result”. He mentioned that Blizzard on the whole, paid their employees below market value salaries (the company is located in Irvine, California which has a relatively high cost of living index) due to this bonus program that afforded them the ability to make up for that difference (similar to how companies during the dot com era used stock options as a means of compensating employees for lower base wages due to how Wall Street was placing insane valuations on internet stocks at the time).
Brevik went on to say that he predicts there will eventually be a “mass exodus” of employees from Blizzard due to this (since he also opined that many were able to pull in double their base pay as a result of the bonus plan and that the elimination of it, means they will be making a lot less (again, I am trying to find actual confirmation that the newer Blizzard Profit Sharing Plan is what he if referring to as having been eliminated). The exodus has sort of already been occurring at the lower levels though starting from senior designers on down into the community management ranks.
He then goes on to say what many of us outside have already been feeling about Blizzard for the past few years; “that Blizzard today isn’t what Blizzard used to be.” <- This part pretty much covers this blog from inception to November 2015 when I just stopped playing (where the whole “automatic sale” of their games went out the window).
Brevik goes on further though to say that he feels that the Blizzard of 3 years from now won’t be even Blizzard today, and how Activision is taking over. This is where I sort of diverge from his opinion though. True, Blizzard has been allowed to operate fairly independently (this has been true of every single time the company was under the ownership of a larger entity) and much of that was due to Morhaime selling the rationale for that as one of the co-founders with any degree of influence. I also believe that new president J. Allen Brack (I also do realize he was not given the title of CEO) will NOT have anywhere close to this level of influence (the other co-founders Frank Pearce and Allen Adham who returned in 2016 after 12 years probably do). And that is where I believe much of the changes at Blizzard will end up happening (not necessarily pressure from Activision).
Brevik feels that Activision is “exiling” all of the Blizzard executives (mentioning some of the most influential people at the company; folks that I’ve mentioned before like Pardo, Metzen, and now Morhaime with the last two co-founders still remaining). Again, I realize that he is drawing upon his past feelings/experience during the time when the talks were going on with Activision wanting to merge with Blizzard’s then parent company, Vivendi Games (that M&A is what is known as Activision Blizzard when Vivendi which has previously acquired the parent company of Blizzard Entertainment, obtained a majority stake in Activision) as that is what eventually led to the Blizzard North co-founders leaving early on (before the acquisition was completed) and later led Blizzard Entertainment to shutter the San Mateo based studio.
I personally believe the changing landscape of the game industry and how the monetization methods has pretty much become an invasive part of it, is what has been a driving factor in the changing the corporate culture and how Blizzard designs and launches their games now. Activision could have been able to exert a lot more pressure in recent years to get the company to go wholesale into cheap forms of monetization but that hasn’t really been the case (it’s been a slow and tepid rollout until Overwatch loot boxes). The need for growth has been a constantly growing pressure though in order to satiate Wall Street’s desire for year over year top line revenue growth though which means that they can no longer really practice the “ship when it is ready” mantra.
The weakening power structure at Blizzard Entertainment as a result of Morhaime stepping is what will eventually lead to a higher degree of acceptance as to how Activision monetizes (on an ongoing basis) their published titles as opposed to Kotick pressuring high profiles executives out of the ranks at Blizzard. I just feel that the exodus is a combination of factors with the game industry in general and how the internal culture is changing as more new blood is hired to design and develop these games.
This is also why I no longer feel a great deal of affinity towards the upcoming Diablo title. The realistic side of me tells me it will look great on the facade but lack the elements that would make it a great ARPG title (given all of Blizzard’s resources). Echtra Games (and Max Schaefer) sucked up a lot of ARPG design talent for Torchlight Frontiers which is the exact type of designers that Blizzard would’ve needed to fill for the “unannounced Diablo project” which should be sneak peeked in a couple of weeks at BlizzCon 2018. Even just this short time out, I feel zero hype for this. I know the cinematic will blow me away but I already am skeptical of what the actual details of the game design will be like (and how it will actually be implemented).
Digressing, Brevik takes the same skeptical approach I’ve been taking; we’ll see what Blizzard has planned (interestingly, he mentions he knows what some of them are which tells me he still has ears and eyes inside the company on the development side) and how well those titles do (and if they don’t do well, how that will impact Blizzard). Myself, I look at the state of World of Warcraft as a leading indicator. Despite issues with each expansion, the staying power with the community is incredibly strong. I would need to see a massive exodus of players to even begin to have concerns about Blizzard’s ability to print money.
Brevik sort of goes on a rant as to what might have happened where the move to eliminate this profit sharing plan was meant to extract more of that profit into the pockets of the top executives at Activision (where Morhaime might have been against that and was thus given his walking papers or resigned out of principle) because Fortnite is “kicking the ass of everyone including Overwatch.” Profits at all cost in the case of shareholder value isn’t something that is foreign to me so I get where they are coming from. As they mentioned though, they have no proof if this was the case but being someone who has been involved in investing for awhile, I do get their drift because I’ve seen it happen a lot.
Again, if the newer Blizzard Profit Sharing Plan is what Brevik is referencing as having been eliminated, then yes, I can see the impact this would have on designers/developers leaving which will end up impacting the quality level of future titles (and that would indeed be a huge red flag) as well as a more solid reason for the timing of Morhaime’s departure. Until I can get actual confirmation of this though, there really is no conclusive evidence as to what roles Activision has played in Morhaime stepping down.
A bit later, he asks his wife what she thinks as to how many people out there realize the team that were in charge of Battle for Azeroth weren’t the same as the ones who launched World of Warcraft. This is where the disconnect is between those who follow these things more closely versus those out there who just pickup and play games on the whim. The fact of the matter is that the majority of people who play games do not give a shit about those details. A lot of this stuff I drone on about on this blog regarding Bluehole (or Korean game studios) are things many don’t really care about knowing. I just write about this stuff to get some of that bullshit off my chest.
Finally, his wife read in chat from some folks suggesting getting some of those folks back together again. Now I know Brevik was intoxicated because he didn’t even flinch and say no, that he has put that behind him (considering all the past politics from Condor Gaming to Blizzard North, their leaving their baby, the other failed studio attempts that followed, Marvels Heroes and Gazillion Entertainment for him, and leaving it to work on his own indie project). The first thing he said is that he would hire Morhaime if he were to start a new company again. To be honest though, no matter if you can even get 80% of the originals together again, you really cannot go back to the past. All of it was a result of being in the right place at the right time. Not to mention that individuals change over time and don’t necessarily have the same views as they did before.
Small companies are just that; they have a tendency to be less structured and more family like. Once something gets as big as Blizzard Entertainment did, the organizational structure of this corporation begins to take hold, and it is only a matter of time before that corporate inertia overtakes the more innocent culture of the early days (and more so when it becomes a publicly traded corporation). This is why even for me, a lot of Blizzard Entertainment’s mission statements read like empty air to me because they were associated with caveats that could be clearly seen in the issues many of their recent titles have experienced (I wrote mainly about Diablo III’s issues prior to the end of 2015).
Nostalgia is a powerful thing but you can never really capture the original essence 100% except to reminisce about the memories (both good and bad).
Disclaimer: for full disclosure, I do own common shares of ATVI (Activision Blizzard)
P.S. There is also a hilarious moment at around 3h49s mark that I had to clip….. xD
