Blizzard tops Microsoft’s Xbox division despite wider layoffs
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Blizzard has become Microsoft's "top performing" studio within the Xbox division, according to leaked internal emails cited by Windows Central, even as the wider Xbox business undergoes major upheaval, including layoffs affecting over 3,000 staff and the spin-off of studios such as Double Fine and Ninja Theory. Blizzard President Johanna Faries shared the milestone with staff, noting the studio achieved it without releasing a single new game during the fiscal year, instead relying on live-service revenue and expansion content from Diablo 4 and Overwatch, whose successes stand in contrast to Blizzard's troubled recent history, including a $50 million settlement in 2023 over a workplace misconduct lawsuit.
Faries said fiscal year 2026 (August 2025 to July 2026) delivered Blizzard's third-highest annual revenue on record and its first consecutive quarters of growth since Overwatch launched in 2016. Diablo 4's Lord of Hatred expansion, released in April 2026, and a revitalised Overwatch, which dropped the "2" from its name and added five new heroes in a single update, its most since launch, were cited as key drivers, with Overwatch posting its strongest quarter since 2022; seven of ten planned new heroes have launched so far in 2026, with the next, D.Va successor D.mon, due on 11 August.
- Blizzard named Xbox's top-performing studio despite no new game releases
- Diablo 4 and Overwatch expansions drove third-highest revenue in Blizzard's history
- Success comes amid Xbox-wide layoffs and studio spin-offs
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Blizzard is one of the video game studios owned by Microsoft, sitting within its Xbox division alongside names like Bethesda and Activision. It's best known for long-running online games such as Diablo and Overwatch, which make money on an ongoing basis through expansions and in-game purchases rather than through a single upfront sale. Microsoft's wider Xbox business has recently been through significant cuts, with thousands of job losses and some studios being separated off from the company.
Johanna Faries is Blizzard's president, effectively its most senior executive, and the person who has been communicating internally about the studio's performance. The financial "year" referred to is Microsoft's own fiscal calendar, which runs from August to July rather than matching the standard January-to-December year. Diablo 4 and Overwatch are Blizzard's two flagship titles: the former is a dark fantasy action game, the latter a team-based shooter that has gone through several name and format changes since it launched in 2016.
Blizzard also has a difficult recent history worth knowing about: in 2021 it faced a lawsuit over workplace conduct, which it settled for a large sum in 2023. That backdrop is relevant to understanding why the studio's current financial performance, and how it is being talked about internally, is being closely watched.
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Originally published by Polygon as “Amid Xbox woes, Blizzard has reportedly become the ‘top performing’ studio at the company”.