Xbox is going through a difficult period, with Microsoft cutting more than 3,000 jobs as part of a major reset. Several respected studios, including Double Fine and Ninja Theory, have also been spun off from Microsoft ownership. Against that backdrop, Blizzard has delivered an unexpectedly strong result.
Leaked internal emails reported by a report from Windows Central describe Blizzard as the top-performing studio within Xbox. Blizzard president Johanna Faries reportedly shared the message with employees during the studio’s recent financial success.
Blizzard’s strong financial year
The message says Blizzard finished fiscal year 2026 as Xbox’s leading studio by performance. It also describes the year as Blizzard’s third-highest fiscal year for top-line revenue.
Fiscal year 2026 ran from August 2025 through July 2026. It was reportedly the first period since Overwatch launched in 2016 in which Blizzard recorded growth across consecutive quarters.
The result is notable because Blizzard did not release a completely new game during that period. Instead, its performance came from ongoing live-service revenue, downloadable content and continued support for established franchises.
Diablo 4 and Overwatch lead the recovery
Diablo 4: Lord of Hatred launched on 28 April 2026, bringing new classes, gameplay updates and additional areas to explore. The expansion was identified as one of the major contributors to Blizzard’s results.
Overwatch was another important driver, delivering its strongest quarter since 2022. Blizzard also changed its approach to the shooter by removing the number from its title, signalling an intention to support the game indefinitely.
On 10 February, Blizzard added five new heroes at once—the largest single hero release since the game launched. The studio planned 10 new heroes for 2026, with seven available by the time of the report.
D.mon joins the roster
D.mon, a melee tank who fights from a mech suit, is the next announced character for Overwatch. She is scheduled to arrive on 11 August. Blizzard has not confirmed whether it will maintain the same release pace in 2027, although the recent financial performance provides a strong reason to continue investing in the live-service shooter.
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A complicated history behind the result
Blizzard’s current performance sits alongside serious workplace controversies from several years ago. Widespread reports alleged sexual harassment and workplace misconduct, while a 2021 lawsuit filed by California’s Department of Fair Employment and Housing accused the company of maintaining a “frat boy” culture.
Blizzard’s legal team denied the allegations. In 2023, however, the company paid more than $50 million to settle a gender-discrimination lawsuit. Much of that payment was directed towards compensation funds for affected workers.
What Blizzard’s position means for Xbox
Blizzard’s performance gives Xbox a rare piece of positive news during a period of layoffs, restructuring and studio departures. It also demonstrates how sustained support for live-service games and expansions can produce strong results without a new standalone release.
That success does not resolve the broader uncertainty around Xbox’s studio strategy, but it does make Blizzard an important part of Microsoft’s current gaming plans. Its next challenge will be maintaining player interest while continuing to address the expectations and concerns surrounding its long-running franchises.
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