MASSIVE MISTAKE a Company Can Make When Aiming to Expand: Blizzard Entertainment Case Study
We previously talked about risk management and how to deal with it. And, what better way to learn something new as a small business than from examples of specific industries and big corporations. At the moment, one the most exciting sectors to watch on the market is the gaming industry. Things move at a fast pace, and daily there are new trends, risk-management techniques, reactions from the audience coming up, with both positive and negative consequences.
Recently, the gaming market showed its first signs of decline; the stock market clearly displays that. Whether it is going to crash or not it is still hard to say. However, it wouldn’t be the first time that the market collapsed. Back in 1983, in the golden age of consoles creation, the market crashed. It needed a couple of years to get back on its feet. What is happening? What are the signs? To get a clear picture of what is currently happening in the gaming market, we are going to analyse one of the biggest brands in the gaming industry Activision-Blizzard.
A Little History of Activision-Blizzard
Activision-Blizzard has a wide range of games on all consoles, such as World of Warcraft, Call of Duty, Guitar Hero, Overwatch, Candy Crash and the Diablo franchise to name a few. Before, Activision and Blizzard were separate companies owned by a parent company Vivendi. However, with time as Activision and Blizzard became so powerful, they decided to part ways with Vivendi and created their own holding company, Activision-Blizzard. They remained and functioned as separate companies for an extended period until corporate executives started pressuring Blizzard Entertainment into making unpopular decisions.
Blizzard had always been a company that listened to its customers – the gamers. That’s why their fan base is so large. Many companies introduce their games to third-party conventions where they interact with their fans. And, thanks to their excellent communication with the fans of their games, Blizzard created their own convention – Blizzcon, where fans from all around the world join and celebrate new announcements, try new games and speak with their favourite developers. However, 2018 wasn’t the year for Blizzard.
In numerous interviews they hinted that something significant was going to happen at Blizzcon, it was Diablo’s time to shine. People started to get hyped and excited. The last Diablo game launched back in 2012 and was followed by an expansion two years later. People were eager and hungry for a fresh game in the Diablo universe, however, things didn’t go as planned. A few weeks before Blizzcon 2018, on their website, Blizzard tried to explain that they love the Diablo universe and work hard to make good and great games, but it is not going to be the thing everyone was expecting. This was a shock for their customers. A lot of people had bought tickets because they were hoping for a new Diablo game. Moreover, the message they sentcreated so much confusion that,it made fans feel the uncertainty.
Blizzcon started, and during the Diablo panel, it was noticeable that the developer was really nervous, you could feel it from his voice. The time for the announcement had arrived, a new Diablo game. Diablo Immortal – a game for mobile. For mobile? It was the first time in the history of Blizzcon to hear boos and disapproval from their audience. Moreover, there is a popular segment that later became a meme. A person asked whether they planned to integrate the game for PC. And Blizzard said their famous line. “What, you guys don’t have phones?” The boos and cynical laughs commenced — a complete disaster for Blizzard Entertainment.
The next day, the market opened. Until the convention, Blizzard Entertainment’s stocks had been on a rising trend, however, soon after Blizzcon everything went downhill. On Oct 4th 2018, one share was valued at $83.49. Six months later, they’ve lost half of their value, trading at only $43.32 per share.
Lessons to Be Learned – What Did They Do Wrong and How Can You Learn from This?
Never announce something, and generate hype around a product, if your messages are not clear enough. I am pretty sure that the risk-management department knew about the risks of creating misleading, but they still took the chance and lost.
When announcing new products or services to your audience, always be clear about your intentions. If you mislead your customers, you will anger them so much that they may stop coming to your shop but also spread bad word of mouth. The primary audience for the Diablo franchise comes from PC and Console platforms. The customers love these platforms, and they didn’t want to change it for another. Blizzard’s goal was to to expand their customers in China, with the development of a Diablo mobile game, and that is okay. However, the main problem lies in the way they presented it to their audience.
It is important to look forward and plan for growth, however you must remember who your core customer is, and not sabotage an already profitable relationship. It is a fact that 99.99% of their Blizzcon audience came from the PC and console gaming. Moreover, they failed to calculate the backlash that the announcement would trigger in their main customer base. The fault lies with the wrong management from the corporate leaders in Activision-Blizzard. When planning to expand your audience, you must never forget the current loyal one.
Therefore, the risk-management team must be on their toes and think things carefully. Finally, it is crucial to create strategies that will not trigger a backlash from your customers, because no damage control can fix bad publicity or prevent losses.
“It is crucial to create strategies that will not trigger a backlash from your customers, because no damage control can fix bad publicity or prevent losses.”
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