Blizzard Named Xbox's Top-Performing Studio in Internal Email, Citing Overwatch and Diablo 4
Blizzard ended Microsoft's fiscal year 2026 as the top-performing studio in Xbox's games division, according to an internal email from Blizzard president Johanna Faries that was shared with press outlets including Windows Central and VGC.
The email, first reported by Windows Central on August 9 and corroborated by VGC on August 10, stated that Blizzard had over-delivered on Microsoft's revenue projections for the fiscal year covering July 1, 2025 to June 30, 2026. Faries told staff that the period marked Blizzard's third-highest fiscal year for revenue in the studio's history, according to VGC.
Fiscal years 2025 and 2026 were also Blizzard's first back-to-back years of revenue growth since fiscal year 2017, the email reportedly said. Faries credited two franchises as the main drivers: Overwatch, the team-based shooter that delivered its strongest quarter since 2022 during the fiscal year, and Diablo 4, whose Lord of Hatred expansion launched in April 2026.
The timing is notable because Blizzard sits inside a broader Xbox business that is contracting in other areas. In the same fiscal quarter — Q4 of FY2026, running April 1 to June 30, 2026 — Xbox content and services revenue fell 10% year-over-year and hardware revenue dropped 13%. Xbox CEO Asha Sharma told staff the company expects to return to growth by the end of FY2027, which closes June 30, 2027, according to VGC.
Blizzard's strong year comes roughly two years after Microsoft completed its US$69 billion acquisition of Activision Blizzard, the publisher behind Call of Duty, World of Warcraft, Overwatch and Diablo. Since the deal closed, Activision Blizzard's games have repeatedly lifted Xbox's overall gaming revenue, even as console hardware sales have slid.
For Blizzard specifically, the email signals momentum after a period of turbulence. The studio has weathered leadership changes, the integration into Microsoft's gaming organisation, and the broader pattern of layoffs that have swept the games industry. Polygon, reporting the same internal email on August 9, noted that Blizzard's top-performing status arrives amid what it described as behind-the-scenes upheaval in Microsoft's gaming division.
What makes the numbers resonate is the contrast they draw. One studio under the Xbox umbrella — a division that saw hardware revenue fall 13% in its latest quarter — carried the performance of the whole studios group. The credit, according to Faries's email, goes to two established franchises rather than a new launch.
Blizzard's upcoming slate includes projects Microsoft has not dated publicly. Whether the studio can sustain its FY2026 performance into the current fiscal year is a question the next set of earnings will answer.
