Blizzard Ends Fiscal Year 2026 as Microsoft's Top-Performing Xbox Studio
Blizzard Entertainment closed fiscal year 2026 as the top-performing studio within Microsoft's Xbox division, according to leaked internal emails reported by Windows Central and confirmed by Eurogamer.
Blizzard president Johanna Faries shared the results in an internal email, telling staff the studio had "over-delivered" on Microsoft's projections for the year. Fiscal year 2026 was the third-highest fiscal year for top-line revenue in Blizzard's history.
Two franchises did the heavy lifting. Diablo 4 — Blizzard's action role-playing game, launched in 2023 and expanded since with regular content updates — continued to sell strongly, bolstered by its first expansion, Vessel of Hatred, which released on October 7, 2024 and added the Nahantu region along with the Spiritborn, a new character class. A second expansion, Lord of Hatred, is scheduled for release in late April 2026 and is distinct from the first.
Overwatch, Blizzard's team-based shooter, delivered its strongest quarter since 2022 during the fiscal year. Together, the two properties accounted for the lion's share of Blizzard's FY26 performance.
The results arrive against a backdrop of significant cost-cutting across the Xbox division. Microsoft announced 3,200 layoffs across its Xbox studios, with 1,600 implemented immediately and the remainder carried out by summer 2026, according to Eurogamer. Blizzard itself was not immune to the reductions, even as it outperformed stablemates inside the division.
Microsoft's broader financial picture underscores the scale of the operation Blizzard sits within. The company reported fiscal year 2025 revenue of US$281.7 billion, up 15% year-over-year, with net income of US$101.8 billion, when it announced results on July 30, 2025. The More Personal Computing segment, which houses Xbox, brought in US$13.5 billion in the fourth quarter alone, up 9%.
What makes Blizzard's FY26 result stand out is the tension it sits beside. A studio posting its third-best revenue year while its parent company trims thousands of roles across the same division is a picture of a business maximising returns from established franchises — Diablo and Overwatch are both well past their launch windows — even as it cuts costs around them. The internal email framing, "over-delivering," tells staff they beat the target. It does not say the targets were generous.
For players, the practical takeaway is momentum: Diablo 4 has a second expansion arriving within weeks of the fiscal year's close, and Overwatch is coming off its best quarter in years. Both franchises now carry the weight of being Xbox's standout performers — a label that, in a year of layoffs, carries its own pressure.
