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Blizzard Entertainment Buys Studio To Boost ‘Dragonflight’ Development

Microsoft $69B Deal Gets Scrutiny in US and UK

Blizzard Entertainment has bought video game studio Proletariat of Boston to support the development of the upcoming World of Warcraft: Dragonflight video game.

The acquisition comes at a pivotal time for the Irvine-based company. Microsoft Corp. (Nasdaq: MSFT) has agreed to purchase parent company Activision Blizzard of Santa Monica for $68.7 billion, in a deal that is now being studied by regulators in the U.S. and the U.K.

Activision Blizzard’s (Nasdaq: ATVI) first-quarter revenue dropped 22% and the video game giant is still facing fallout from allegations of illegal job discrimination and harassment, while its stock has been gaining this year.

Blizzard is counting on the latest extension of World of Warcraft, known as a massive multiplayer online role-playing game (MMORPG), to give the company a further boost. It is one of Blizzard’s most popular titles.

“Dragonflight isn’t actually out yet, we have started pre-purchases for the game and have confirmed it is launching this year, but the game is still very much in development,” a Blizzard Entertainment spokesman told the Business Journal on July 7.

 

100-Person Team

Blizzard Entertainment, which now numbers just over 2,700 employees and is Orange County’s largest software company by employee count, plans to add people to the team as needed, both here in Irvine and at Proletariat in Boston.

“Proletariat is just over 100 employees,” the spokesman said, adding: “They will be supporting the development of Dragonflight.”

Terms of the purchase transaction, which closed on July 1, were undisclosed.

Proletariat began working with the World of Warcraft development team in May and will be fully integrated into Blizzard Entertainment over the coming months.

“Over the next two years we plan to hire hundreds of the best developers to serve the needs of our World of Warcraft players,” Bobby Kotick, chief executive of Activision Blizzard, said in a statement announcing the Proletariat acquisition earlier this month.

 

Players First

“We are putting players at the forefront of everything we do, and we are working hard to both meet and exceed their expectations,” said Mike Ybarra, president of Blizzard Entertainment.

Ybarra said the company is making sure “we have the resources to produce experiences our communities will love.”

“Proletariat has deep experience building MMORPGs,” according to the Blizzard Entertainment president.

In addition to World of Warcraft, Blizzard is best known for hits including Hearthstone, Overwatch, the Warcraft, StarCraft, and Diablo franchises, and the multifranchise Heroes of the Storm.

 

Microsoft Deal

Meanwhile, Microsoft’s plans to buy Activision Blizzard have brought on official scrutiny in both Washington, D.C., and London following their January announcement. The Federal Trade Commission is investigating Microsoft’s proposed purchase, and how it might impact workers.

The U.K.’s competition regulator said July 6 it was looking into whether the deal would substantially lessen competition.

Another Activision Blizzard spokesperson had no comment when asked about the scrutiny by the two governments.

Shares of Activision Blizzard have gained about 17% so far this year and were trading at $78.06 apiece for a market cap of $61 billion as of July 11. ­­

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Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal
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