Blizzard Entertainment has reportedly emerged as Xbox's top-performing studio, with newly surfaced internal information indicating that the World of Warcraft maker was a rare bright spot during an otherwise turbulent fiscal year for the gaming division.

Microsoft Gaming returned to the Xbox name in February 2026 following Phil Spencer's retirement and the appointment of Asha Sharma as CEO. Sharma previously served as Microsoft's CoreAI Product President, overseeing Azure AI and developer tools. The division underwent another branding change in May, adopting the stylized XBOX name before entering one of the largest restructurings in its history.

The restructuring has involved widespread layoffs, strategic changes, and the divestment of several studios. Xbox is reportedly planning roughly 3,200 job cuts by mid-2027, with around half of those layoffs taking place in July 2026 at the beginning of Microsoft's FY2027. Microsoft also decided to sell Undead Labs and Ninja Theory, while Compulsion Games and Double Fine Productions were allowed to transition to independent ownership.

Despite the upheaval, however, at least one major Xbox studio appears to have finished FY26 on considerably stronger footing.

Blizzard Reportedly Finished FY26 as Xbox's Biggest Earner

Internal Emails Point to Strong Revenue Growth as King Is Excluded From the Studio Comparison

Blizzard reportedly ended FY2026 as the highest-revenue studio within Xbox's traditional console and PC development group. Microsoft insider Jez Corden reported the claim after purportedly official corporate emails were leaked online.

Among the leaked material is reportedly a memo from Blizzard president Johanna Faries celebrating the studio's performance during the fiscal year. According to the memo, Blizzard finished FY26 as the top-performing studio in Xbox's studios division and recorded its third-highest fiscal year for top-line revenue in the company's history.

The distinction appears to apply specifically to Xbox's traditional PC and console studios rather than every business owned by Microsoft Gaming. King, the mobile developer behind Candy Crush, operates separately and had generated more annual revenue than Blizzard for five consecutive years before Microsoft acquired Activision Blizzard. Microsoft subsequently stopped reporting King's individual financial performance.

The leaked material reportedly indicates that FY25 and FY26 were also Blizzard's first consecutive years of revenue growth since FY17, suggesting that the studio's strong FY26 was part of a broader recovery rather than an isolated result.

Several major releases and ongoing games appear to have contributed to that performance. Faries reportedly highlighted the spring launch of the Diablo 4: Lord of Hatred expansion alongside continued engagement with Overwatch. The memo also claims that Overwatch had just delivered its strongest quarter since 2022.

The exact size of Blizzard's lead over other Xbox studios remains unknown. The leaked emails reportedly do not include a detailed studio-by-studio financial breakdown, making it impossible to determine how far ahead Blizzard finished or which other studios came closest. That omission is understandable given that the messages were intended primarily to recognize employees and celebrate the company's performance rather than provide shareholders with detailed financial results.

Blizzard Still Operates Differently From Much of Xbox

Blizzard's reported success is particularly notable because Microsoft has never completely integrated the company into Xbox Game Studios following its acquisition of Activision Blizzard in October 2023.

Microsoft retained Activision Publishing, Blizzard, and King as separate business units, each with its own leadership structure. Following former Activision Blizzard CEO Bobby Kotick's departure, Microsoft also chose not to appoint a direct replacement for the overall ABK leadership position, giving the individual businesses considerable autonomy.

According to Corden, Blizzard remains a "limited-integration entity" within Xbox as of August 2026. That structure has allowed the studio to retain a degree of organizational independence even as Microsoft's broader gaming operation has moved toward greater centralization.

That makes Blizzard an interesting counterpoint to one of the central problems identified by Sharma's Xbox leadership. The company's latest restructuring is partly intended to reduce fragmentation between teams that have historically operated independently and establish a more unified operating structure and profit-and-loss model.

Blizzard's reported performance does not necessarily prove that its relative independence was responsible for its recent growth. However, it does demonstrate that one of Xbox's more autonomous businesses entered the restructuring from a position of considerable strength. In fact, if the leaked figures and internal claims are accurate, Blizzard has managed to outperform the rest of Xbox's traditional studio portfolio—including the enormous business surrounding Call of Duty.

For a division undergoing layoffs, studio sales, and sweeping organizational changes, Blizzard's reported FY26 performance stands out as a significant success story.