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How Blizzard Entertainment thrives

Roughly every two years, Blizzard Entertainment releases a new expansion to their most valuable game World of Warcraft. But a question that is constantly asked is, how do they manage to charge a monthly fee in addition to expansion costs and not only maintain the amount of users they currently have but grow as well? In taking from what we have been exposed to in class, the answer to this question has become a little bit easier to identify.

Ultimately, with a large expectation of the number of users that will play the game, Blizzard is able to use upward pressure in creating a demand to raise their market share to an even higher equilibrium. In other words, especially with a MMORPG which relies on a lot of users, if the population expectation is large then people are more willing to buy the game because the game will have a higher value to them.  Blizzard creates this higher expectation through heavy advertisement via online sources. Specifically Facebook advertisements. These show announcements about game updates and how many of your friends like the World of Warcraft’s posts in addition to people whom you do not know. Thus, exposing people to a larger population that uses the product. In addition, events such as Blizz-con, which sells out is tickets within the day they are released, also informs people of the games popularity.

However, the most important aspect of this strategy as eluded to in our discussion of network effects, is making the population confident in a games success to insure a significant fraction of the population to purchases the game. However, this seems almost easy for Blizzard to achieve. With an impressive track record of surviving as the number one MMO for 10 years,  keeping current players active through updates, and showing that they do not plan to go anywhere, Blizzard makes users investment of their time worth it.


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November 2014