Amid Xbox woes, Blizzard has reportedly become the ‘top performing’ studio at the company

Microsoft’s Xbox division has not been having a good year. The company is laying off over 3,000 employees as part of a major “reset” that has led to several acclaimed studios, like Double Fine and Ninja Theory, being spun off from Microsoft ownership. However, it seems that despite the tumultuous times, Blizzard is coming off a very strong performance.

According to a report from Windows Central, leaked internal emails indicate that Blizzard has become the “top performing” studio at Xbox. Blizzard President Johanna Faries sent the message to staff last week to celebrate the studio’s recent success under Microsoft.

“In FY26 Blizzard ended the year as the top-performing studio in Xbox’s studios division, and this past year has marked our third highest fiscal for top line revenue in Blizzard’s history,” Faries’ email allegedly reads. She further explains that fiscal year 2026 (August 2025 to July 2026) was the first time that Blizzard had seen consecutive quarters of growth since Overwatch launched in 2016.

Perhaps the most surprising element of this apparent success is that the studio did not release a new game this past year, and relied on a combination of live service revenue and DLC sales. Diablo 4’s expansion Lord of Hatred was released on April 28, 2026, adding new classes, gameplay updates, and additional areas to explore.

“Diablo 4: Lord of Hatred and Overwatch drove exceptional performance in particular, with Overwatch delivering its strongest quarter since 2022,” Faries wrote. This past year marked a shift in strategy regarding Overwatch. For one, the company dropped the 2 from its title, signaling a plan to support the game indefinitely. More importantly, Blizzard released five new heroes for the game on Feb. 10, the most added at once since the game’s launch. A total of 10 heroes are planned for release in 2026, with seven out so far.

D.mon, a melee tank in a mech suit, is Overwatch‘s next character, and she’s coming to the game on Aug. 11. It’s clear the company is redoubling support for its live service shooter. The studio hasn’t announced if it will continue at this breakneck pace in 2027, but this seems likely given the recent financial success.

While Blizzard has been a bright spot for Microsoft as of late, the studio was embroiled in major controversies a few years ago following widespread reports of sexual harassment and workplace misconduct. A 2021 lawsuit brought forth by California’s Department of Fair Employment and Housing accused Blizzard of having a “frat boy” culture. While Blizzard’s legal team denied the allegations, the company paid over $50 million to settle the gender discrimination lawsuit in 2023. The payment largely went toward compensation funds for affected workers.