A new subsidiary company has quietly emerged as Xbox’s top-performing studio, according to leaked internal communications that surfaced online.
The revelation comes from a reported official email that was recently discovered by an insider, giving fans and industry watchers a rare direct look at how the studio’s fortunes have shifted within Microsoft’s larger gaming division.
Xbox’s New Highest-Earning Studio Unveiled in Leak
Blizzard Entertainment
Longtime Microsoft insider Jez Corden reported the leak, citing what he described as purportedly official corporate emails that made their way online unofficially.
According to the leaked memo, Blizzard president Johanna Faries told staff that Blizzard ended fiscal year 2026 as the top-performing studio within Xbox’s entire studios division.
Faries reportedly wrote that the past year marked Blizzard’s third-highest fiscal year for top-line revenue in the studio’s history, and that fiscal 2025 and 2026 together represented Blizzard’s first consecutive years of growth since fiscal 2017.
That back-to-back growth streak stands out given how turbulent the past decade has been for the “World of Warcraft” and “Diablo” maker, particularly following Microsoft’s contentious acquisition of Activision Blizzard.
What Made This New Studio Take the Top Spot?
Diablo IV: Lord of Hatred
According to Faries’s memo, two titles carried most of the weight behind Blizzard’s strong year. The latest expansion on its action role-playing game, “Diablo IV: Lord of Hatred,” and its renowned hero first-person shooter, “Overwatch,” were both singled out as major performance drivers.
It was noted by the executive that”Overwatch” is specifically responsible for delivering its strongest quarter since 2022. That kind of momentum for “Overwatch” is notable given how much competition the hero shooter genre has faced recently from newer titles.
Blizzard’s rise comes even as sibling studios within the same Activision Blizzard umbrella struggled. According to GameRant, Activision and King both reportedly saw a slump in fiscal 2026, following the disappointing launch of “Call of Duty: Black Ops 7” and a difficult stretch for “Candy Crush.”
That contrast helps explain why Blizzard’s individual performance stood out enough to land it at the very top of Xbox’s studio rankings for the year.
Xbox’s Challenges This Year
Blizzard’s success arrives against the backdrop of a broader, difficult stretch for Xbox as a whole.
Microsoft has pushed forward with significant restructuring across its gaming division this year. This included layoffs that have touched multiple studios and the spinoff of several teams into independent entities, among them Double Fine, which faced its own subsequent layoffs after becoming independent.
Even Blizzard wasn’t fully spared from those cuts, though reports describe the reductions it faced as comparatively minimal next to what other parts of the division experienced. Xbox has publicly framed much of this year’s turbulence as part of a broader reset aimed at returning the division to sustainable growth by fiscal 2027.
With Blizzard now positioned as Xbox’s clear financial standout, Microsoft appears increasingly likely to lean on the studio’s momentum as it continues working to stabilize the rest of its gaming portfolio heading into the new fiscal year.
That said, according to the report, Blizzard did not mention anything about how much it led against other studios under Microsoft Gaming and Xbox.
