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Mike Morhaime was recognized at the Gamelab event in Barcelona with the Honor Award, as his wife and four-year-old daughter looked on from the front row.
He received a standing ovation for the recognition of a career that spanned more than 27 years at a single company. Before that, I was honored to moderate a fireside chat with Morhaime about his career onstage in front of hundreds of onlookers at Gamelab.
He said that Blizzard’s greatest creation wasn’t its games but its culture, which allows creative talent to create their best work. We talked about that culture, Blizzard’s discipline of shipping only high-quality games or cutting games that weren’t good enough, and many other topics during the hour-long onstage interview.
We touched on the challenge of games like Diablo, Titan, and Overwatch. Morhaime also candidly responded on topics such as crunch, sustainable game development, and other topics.
Three top investment pros open up about what it takes to get your video game funded.
Here’s an edited transcript of our interview.
GamesBeat: You left Blizzard in October. What have you been doing for the past months?
Mike Morhaime: It was a pretty big decision and change in my life. I’d been with Blizzard for almost 28 years when I stepped down. I’ve been spending a lot more time with my family. My wife and daughter are here. My daughter is four, so this is her first games conference, I think. [laughs] We’ve been spending time traveling and thinking about what to do next. My wife and I worked together at Blizzard, so we both left around the same time.
It’s nice to take a break. It was a lot of hard work. We were very focused. Focus is so important when you’re making games. I was very focused on the company and the games we were making for such a long time that it’s quite a change to step back and be able to look at all the amazing things happening in the world and have a blank sheet of paper. I can think about all the different possibilities of what we might do in the future.
GamesBeat: Are you thinking about doing something new?
Morhaime: Definitely thinking about doing something. [laughs] Everything will be new.
GamesBeat: Can you give us the flavor of what it was like at Blizzard in the beginning, when you met Allen Adham and Frank Pierce and got the company going?
Morhaime: It goes back to when I was at UCLA. I was studying electrical engineering. I became very good friends with this other student, Allen Adham. Allen was studying computer science and engineering.
How we became friends is an interesting story. We had a couple of classes together during my last year. One day we were sitting in the computer lab. It was just the two of us, working on our project. Allen had to print something. Back then the printer was located on another floor of the building, so he locked his terminal and went to retrieve the document he printed. Now it’s just me sitting alone with this locked computer terminal next to me. I noticed that after 10 minutes it unlocked.
Now I’m sitting alone with a computer that’s no longer locked, so I did what probably all of you would have done. I re-locked it, typed in a different password, my own password. I wanted to pick something I wouldn’t forget, because I figured I’d have to reveal it eventually. I wanted to pick something I’d never used before, so I picked “joe.” Sat down at my computer and five minutes later, Allen comes back and sits down and when he types in his password, it unlocks. What happened?
I said, “Allen, how did you do that?” He said, “Do what?” I said, “Type in the password. What was your password?” He said, “I’m not gonna tell you that.” I said, “Was it joe?” He said, “How did you know?” Anyway, we laughed for like a half hour. We just couldn’t believe that happened. We became very good friends, and when Allen graduated, he wanted to start up a game company. He set about recruiting me to join him.
I graduated six months after Allen, and I’d gotten a job with Western Digital writing test software for their network cards. I had no game development experience. Allen told me, “Mike, it’s not rocket science. If we get some of our smart friends together, we can figure out how to do anything. We’ll just find people that are passionate about making games, that are really smart, and we’ll be able to compete with the best companies out there.”
It’s funny. I said, “Well, why don’t you come over? I want my dad to hear what you have to say.” Allen actually gave the whole pitch and my dad said, “Mike, you have a great job at Western Digital. This sounds very risky.” I also sought other advice. One of my cousins said something different. He said, “Mike, you’re young. You don’t have a family yet. If it doesn’t work out you can always get another job.” So I ended up quitting the job at Western Digital and joining Allen. We started Silicon and Synapse.
Allen had been friends with Frank Pierce from school. They had some classes together. They would always go to the arcade after class and play arcade games. We started as the three of us, Allen, Frank, and I. Our first day at work was–we had stopped at a local office supply store, bought a couple of assemble-your-own desks, and we spent the first day building desks.
GamesBeat: There was a defining moment early on in Blizzard’s history early on with the Lost Vikings. You had this experience with Brian Fargo very early, where he gave his feedback of the work you had done. Can you tell us about that?
Morhaime: Lost Vikings was our first completely original game. Let’s see. It was for the Super Nintendo. The console had come out a couple of years before, and we had done a couple of other games, but this was the first completely original project we were making. Interplay Productions, Brian Fargo’s company, was going to publish it, and they were funding development. We had gotten to a stage where we were pretty happy with the game. We thought we were pretty close to finishing the game.
Brian Fargo had taken the game home to play, and when he came back with his feedback, he was actually very critical and very harsh. He thought the game was too difficult. He thought our characters all looked too similar. He wanted us to review some of the major artwork for the game. This was a very important learning point, because my initial instinct was, “What’s he know? He doesn’t know what he’s talking about. The game is fine. We should just release it.” But Allen’s reaction was the opposite. Allen felt like Brian was right about everything, and we should go and make all of these changes.
We didn’t have the art resources to do all of the art changes that Brian wanted us to do, and so Brian actually supplied us with one of Interplay’s artists, who spent a bunch of time redoing the art. After going through all of this process and seeing how much better the game became — because of the improved art for the main characters, because of the levels becoming much more intuitive and much less frustrating for new players — I really got to see the importance of fresh perspective, and the danger that–when you’re so immersed in a product and you’re working on it with a group of people who are also working on the same thing, it’s easy to lose sight of the flaws in your product.
You know why you made every single decision. You know how the game is supposed to be played. You have to see how untainted players interact with the product, people who weren’t in all the design meetings, who don’t know how to control the characters, who don’t know the right way to avoid the obstacles and dangers. Constantly getting fresh perspective to look at the product and react to it is critical. We built that into our process.
GamesBeat: Did that become an ethos for Blizzard, to focus on getting the quality right?
Morhaime: Quality, easy to learn, having depth but still having accessibility. Easy to learn, difficult to master. Making sure that the folks who are designing the game and programming the game aren’t judging the difficulty.
GamesBeat: A funny thing is that you probably should not get an award for focusing on quality. It’s an obvious thing to do.
Morhaime: It is.
GamesBeat: Everybody knows they should to do that. But it’s interesting how everybody knows that, and yet so few people actually do it in a meaningful way.
Morhaime: Everybody sets out to do it. Then you run into the realities of the world and the pressures of the world. The desire to achieve whatever the plan is, to make whoever the stakeholders are–to make sure they’re happy. It may be budgetary issues. It may be timeliness issues. It may be people getting too attached to ideas that are there and not wanting to change them. All of these things are in the balance.
There’s the saying that perfect is the enemy of great, because if you strive for perfection you’ll maybe never ship. There’s a point that’s good enough. But I do think that there’s so much competition out there that if you don’t hit the quality bar, the product will just fail.
GamesBeat: You mentioned that your ship rate may have been something like 50 percent. Half of the games you guys started actually shipped.
Morhaime: Yeah. I’ve gone back every few years and checked the math on that. We’ve been pretty consistent. About half of the titles that we started didn’t ever make it. Of course you never start out thinking that something you start isn’t going to make it, but at some point along the way, you realize that for one reason or another. Maybe you don’t think the market is there. Maybe the opportunity cost of getting the product to where it needs to be is just too high.
GamesBeat: You gave a talk some years ago at the DICE Summit where you said that 14 games were killed in Blizzard’s history.
Morhaime: I’m sure it’s gone up from there.
GamesBeat: That’s a lot of following through on this quality regime.
Morhaime: The thing that we were committed to doing–if we do decide to ship something, then we need to be comfortable putting the Blizzard name on the game. We viewed the Blizzard brand as our most important asset. Obviously the people are extremely important, but in terms of our most important product, maybe, the Blizzard brand–we wanted that to stand for something. We wanted to build trust in that brand.
Early on we used to have this dream where a gamer walks into a store. Gamers don’t really walk into stores anymore, but imagine a gamer walks into a store and sees a few games on the shelf, a few boxes. One of them is by Blizzard. They don’t know anything about the game. And then some other ones maybe they know a bit more about. We wanted them to choose the Blizzard game based on the brand alone, knowing that if Blizzard’s name is on the box, they know it will be great. That was a very motivating idea for us.
GamesBeat: You learned some things from these games that either slipped or had to be shut down. What do you thnk some of those lessons were?
Morhaime: Let’s talk about one that did ship first, which was Diablo. This is back in 1996. This is a boxed product. In the U.S. the absolute most important retail weekend at the time was Thanksgiving. The Christmas holiday season was huge. Conventional wisdom was that you had to get your game out in November before Thanksgiving.
Diablo was not going to be ready. We tried everything. In fact we took down the entire StarCraft development team to pile on and help get Diablo out. We had some multiplayer bugs that just prevented the game from being in a shippable state. We continued working, and then it became evident that we were in danger of missing the year entirely. We worked as hard as we could. We actually missed Christmas. I think we finally mastered the product on December 30, and they started shipping boxes on December 31. We made the year. Kind of?
The moral of the story is that it was the best-selling game of 1997. Nobody remembers or cares that we missed Thanksgiving and Christmas. The fact is, that was a great game, and people remember playing it and loving it. The lesson we took from that is that it’s way more important that the game is great. It’s way less important that you hit the date that you want to make, even though it’s extremely painful. It’s painful every time. But it would have been way worse if we put out a buggy product on November 15, and then maybe the game would have been a failure. I might not even be sitting here.
As far as other lessons, let’s see. I’ll take Titan as one. Project Titan is a game–we’ve tried really hard not to announce any games that weren’t ready to be announced, where we weren’t sure that we would release them. Titan was an exception. We wanted it to be our next generation, our sequel to World of Warcraft. We took a lot of our senior developers and put them on this project.
Where we really failed was we failed to control scope. It was very ambitious. It was a brand new universe. It was going to be the next generation MMO that did all sorts of things. It had different modes. We were kind of building two games in parallel at the same time. They never really came together. We struggled. The game was in development for many years. We didn’t announce the game, but we had talked about how we were working on a next-generation MMO. Somehow the codename did get out there. I don’t know if we released that or not. But I remember a bunch of slides, mostly targeted at analysts and investors, because we were part of a public company.
What ended up happening with that game is at some point, the team came to us and said that the engine wasn’t where it needed to be. The team had grown to a point where it was difficult to get the engine to where it needed to be while keeping the team busy. They wanted to take some time to redo all the tooling and the technology to be able to be more productive making the game.
Instead of doing that, we asked the team to take a couple of months and think about–that’s one idea that we could do going forward. Think about a couple of other ideas. If we were to start right now and do anything we wanted, what other things could we do? They took about two months, came up with a couple of different ideas, and one of those ideas was Overwatch. The team was very excited about that idea. We ultimately, of course, decided to move forward and make Overwatch, but we did have to make a decision.
GamesBeat: What was Overwatch as far as how it was described to you at the time?
Morhaime: The pitch was basically–it was going to be an evolution of a Team Fortress sort of game in a superhero universe. It was going to leverage some technology that was–we were going to take some of our best technology from Titan and from World of Warcraft. We were going to take some characters and worlds from some of the Titan universe design. We thought we could make a really compelling game, with much tighter scope control.
It’s probably one of the best decisions we made. We took something that wasn’t going to ship for a long time, and may never have shipped, and turned it into something that was an awesome universe and an awesome game. And now it’s one of Blizzard’s strongest teams.
GamesBeat: What was interesting to me is that in all of what you described, you were not the first. Blizzard was not the first at making team shooters. You were not the first at making a lot of these games in different genres. You didn’t make the first realtime strategy games. Blizzard was in some ways following others into genres.
Morhaime: We always tried to look for areas of the market that we felt we could add something to. Where there’s a game that we love, a game that we feel like, if we took–we could take it somewhere it hadn’t gone before. We might be able to take elements from different genres to create something brand new.
GamesBeat: To switch a little bit to the scope of those 28 years, Blizzard changed hands many times. When I came in and wrote my first story about you, it was about two or three guys who, in their 20s, were now rich because they’d sold their video game company to Davidson and Associates for $7.5 million–
Morhaime: $6.75 million.
GamesBeat: You guys could have retired on that money.
Morhaime: Well, we couldn’t have lasted that long.
GamesBeat: The company went from Davidson to CUC to Cendant to Havas to Vivendi to Activision, becoming Activision Blizzard. That last transaction was, what, $20 billion? $22 billion?
Morhaime: Yeah, it was about that, $22 billion. I’ve read on the internet–somehow people take the $22 billion transaction and somehow assign me a percentage of that, which is very incorrect. [laughs] We sold the company a long time ago, for that $6.75 million.
GamesBeat: Well, hopefully you got a bonus. [laughter] But why did you stay through all of that? Allen checked out early, after about 10 years or so?
Morhaime: Allen actually left right before World of Warcraft shipped. He was the original lead designer on the game, but he did leave before we shipped it. He went off and created a hedge fund. He managed that for a decade, and then I think he missed gaming too much. He called me up one day and said, “Mike, I really want to get back into gaming.” I said, “We’d love to have you back.” He’s actually back at Blizzard now, working on new products.
GamesBeat: When he left, did you feel comfortable taking over the leadership at that point?
Morhaime: Right after we shipped StarCraft, Allen actually stepped down as president. That’s when I took over as president. That was the moment that I was running Blizzard. When Allen left completely, he was part of our management team, but that was less of a transition for me personally. For the World of Warcraft team, it was pretty huge.
GamesBeat: You started with him leading this way, toward doing the right thing. Blizzard continued to do the right thing over the years. How did you keep that up?
Morhaime: I remember one other moment. It was right after we shipped StarCraft. Nowadays, when Blizzard releases a game, it’s localized into all these different languages. We do a globally synched ship. But back in 1998 when we released StarCraft, it was launched in English, and then over the course of the next year or two we translated it into a lot of other languages.
One of the first languages we were working on was German. I remember the partner we were working with had secured some major German magazine cover for us. We were going to be able to include our discs with the magazines. It was a big opportunity. But we had to deliver the German master that day or something. I had a list of bugs that we were working on fixing. It was this dilemma. Do we ship with some of these bugs? Some of them were language typos, German language things that just weren’t–it was a polish issue.
And so I took the problem to Allen. I said, “Hey, Allen, here’s this opportunity, but we need to give them the discs today. We have these bugs. What should we do?” He immediately said, “Fix the problems. There will be other covers. Don’t worry about that. Why wouldn’t we just fix these?” That was amazing for me, because he was right. But it’s so easy to lose sight of that, because you have these opportunities that you’re going to miss. That’s something I carried with me for many years, that mentality. Let’s get it right. Let’s get it as right as we can get it, even if it means missing a few opportunities. Other opportunities will always come along. Just have faith.
GamesBeat: Blizzard is distinct from a lot of other game companies out there in how rarely they get into deep trouble with their fans. You look at a company like Electronic Arts, it seems to be almost an annual occurrence for them.
Morhaime: Well, our fans keep us on our toes, for sure. We have a lot of passionate players that let us know when they don’t agree with certain decisions. Diablo III was certainly a tough launch for us. We had a lot of feedback about the game, about the auction house, about the impact of the auction house on the game.
GamesBeat: Can you talk about that in more detail? The auction house was one of the few big run-ins you had with your fans.
Morhaime: A little background on that. One of the things we were thinking about when we were working on Diablo III–in Diablo II there was a secondary market for items. When there is a secondary market for trading, if you don’t provide an official mechanism for doing this, you get all sorts of behaviors that occur in the game that are damaging to the play experience for people. You could have people that are trying to steal items from people via either in-game mechanics or trying to steal passwords with keyloggers and various things like that. You also have people that set up businesses to facilitate item trading, and not all of them are above-board businesses. Some of them are just trying to steal your credit card number.
We knew this was an issue. In approaching Diablo III, we thought, “Okay, people are gonna do this anyway. Why don’t we just provide them with a safe and secure way of trading items?” But the problem was, we didn’t design the loot model with that in mind. We designed it and playtested it without an auction house internally, so when we added the auction house to a game that’s dropping tons and tons of loot, we had this situation where it’s way cheaper and way easier to get secondhand items off this auction than it is to spend hours playing the game and earning items yourself. No matter how many hours you play, everyone is crowdsourcing the best items in the world and making them available very inexpensively.
It made it so as soon as you went to the auction house, you’d have a very hard time finding anything better in the game itself. That completely destroys the item reward loop, the whole game loop.
GamesBeat: This is what later became identified as the “pay to win” problem in other games.
Morhaime: Your second-best sword has no value to you. So you put it up in the auction house, and you’re going to sell it pretty cheap because lots of people have swords that are way better than the ones you’re offering. When I’m going to buy a sword and your second best sword is way better than my best sword, I’m going to buy that for maybe a dollar. That’s not really–it’s sort of “pay to not have fun.”
GamesBeat: And you ultimately did the right thing with this.
Morhaime: We did. I feel like we had an opportunity with our expansion–almost this one-time opportunity to relaunch the game. We went to the game team and we said, “Would removing the auction house make the game better?” And they said “Yes.” “If you could do whatever you wanted, would you snap your fingers and remove the auction house?” “Yes, absolutely.” We said, “Okay, then that’s what you should do.”
GamesBeat: Did that ruin your chief financial officer’s day?
Morhaime: I don’t think so. I mean, I don’t think there was a spreadsheet you could show the CFO that could prove to them that that was the right call. But it was the right call. I think all gamers know it was the right call.
GamesBeat: You could put this down as another lesson, things you learned from. What about other things that felt like the biggest decisions, and also maybe your biggest regrets?
Morhaime: One of the things that we realized with the evolution of gaming and how gaming is now this global thing, more mass market than it’s ever been, is that we started off trying to make individual games. Then we realized that it’s actually–a lot of it is about the community around the games as much as the games themselves. Investing in and supporting that community around the games.
We started running Blizzcon in 2005. It really started–we had World of Warcraft, which was very successful. We saw that EverQuest had a show where they had all the EverQuest folks coming out, and that was very successful. We thought, “Why don’t we do something like that with World of Warcraft?” That thinking led to, “Well, if we do that, we really should celebrate all of Blizzard’s community. It’s not just World of Warcraft.”
It was an experiment in the beginning. We had no idea whether people would want to attend or whatever. But it was so successful that the show has grown from being initially maybe 6,000 people to the latest one drawing about 30,000 people. It’s become the epicenter of the Blizzard community. It’s really important for our developers to interact directly, to have that face time with some of our most passionate players. After the show everybody comes back to work energized in a completely different way.
GamesBeat: The most recent Blizzcon was where you chose to hand over the reins. That was also the show where Blizzard got another rare negative fan reaction, when you announced the mobile Diablo. You can look at some of this from outside of Blizzard now, right?
Morhaime: When you have a group that’s really passionate about a franchise like Diablo and really excited about a product that hasn’t been announced yet–I think Blizzard tried to manage expectations. They weren’t going to announce Diablo IV at the event. I’m not sure that message really got through. They posted on the forums and everything like that, and in the past that would have been enough. In this case I think most of the audience probably did not get that memo.
GamesBeat: It’s rare for you to talk about games far in advance anyway.
Morhaime: Right. In that case, maybe there should have been more discussion about the Diablo franchise not abandoning the PC. If we had announced the products in a different order I think it probably would have been fine. But lessons have hopefully been learned.
GamesBeat: Blizzard has had some interesting perspective on a lot of things over the years, like China becoming a huge force in games. What’s your perspective on China and its place in the future?
Morhaime: China is an absolutely huge market. You have more than a billion people playing games. Maybe it was last year or so that China surpassed the United States as the largest gaming market in the world. You have a lot of investment in China in developing games. It’s going to be a major force in gaming, and I think you’re going to start seeing more gamings coming to western markets. Historically it’s been about the western market exporting games into China, but you’re going to start seeing more stuff coming out of China to the rest of the world?
GamesBeat: What has it been like to watch the evolution of esports? StarCraft was essentially the beginning of that.
Morhaime: Esports started out in Korea. It was popular in Asia to a level that the United States and the west have really only just begun to catch up to in the last couple of years. It’s going to continue growing. It’s just the beginning.
Back in 2010, with Twitch becoming very popular, it made broadcasting esports accessible to all sorts of different broadcasters and publishers. You don’t need to rely on other media. You can go direct to the consumer now. That’s ignited something that’s not going to slow down.
GamesBeat: Yves Guillemot at Ubisoft recently said that he’s hoping we hit 5 billion gamers in the next 10 years from where we are now. He thinks one of the ways we’ll do that is through cloud gaming, like Google’s Stadia, making triple-A gaming in particular much more affordable across all platforms. Are you bullish on that?
Morhaime: I am. One of the nice things there is you can truly be device-independent. You don’t need to rely on the capabilities of a particular device to do some amazing things. Latency is still going to be a challenge, especially for some games that require low latency.
GamesBeat: What about openness in the game industry? Blizzard’s impulses seem to have been more closed over the years, with things like Battle.net and the Diablo auction house. Running these things yourselves seemed to be the best way to ensure quality. But there are a lot of different voices, like Epic’s Tim Sweeney, talking about the need to create open standards that fall into place in order to make the future of computing happen. If you look back on Blizzard, do you think you could have done more in that area?
Morhaime: One of the things I think has been important for Blizzard is maintaining the direct relationship with our players. Having a platform that we owned and controlled was important for that strategy, and also to not be dependent on other publishers. If we needed a platform to do certain things, to support specific games, that was within our control. The platforms and tools have improved a lot in the last decade. It’s probably less important for studios now, especially if they don’t have that technology already.
GamesBeat: Did you ever ultimately think of Blizzard as something more than a studio?
Morhaime: I thought of Blizzard as a developer and a publisher.
GamesBeat: But not a platform?
Morhaime: I thought of Battle.net as a platform. We were pretty proud of that.
GamesBeat: Coming from the outside now, what’s your prediction as far as where Blizzard is going to go?
Morhaime: As a gamer I hope it continues making excellent games. I look forward to playing them. I have a ton of friends that are still at the company that I talk to. J is a very good personal friend. I know they’re working on a bunch of things. I just wish them a lot of luck and a lot of success.
GamesBeat: When you think about what you’re doing next, you’re not announcing any of that, but what’s your thought process like as far as what you want to do?
Morhaime: Right now the process is making a list of all the ideas that we’ve come up with. My wife and I have been talking to a lot of people that are doing interesting things. We’ve gone to some conferences and heard about not only what’s going on in the game industry, but also what’s going on in a lot of different industries around the world. We have ideas all the time that go on our list, and then we’re starting to develop some of them out and explore them.
GamesBeat: Does it remind you somewhat of the early days with Allen and Frank?
Morhaime: You know, we were always very focused on executing stuff. I don’t know that we had the luxury of being in a completely open, unconstrained space. We knew we wanted to make games. We did have some brainstorming sessions with the whole company where we would break off into groups and pitch various ideas. Very quickly we’d narrow that down and focus on what we wanted to pursue, and then we were going.
Disclosure: The organizers of Gamelab paid my way to Barcelona. Our coverage remains objective.
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