Blizzard, following Blitzchung's ban, on the verge of a crisis while it's 'assessing the situation'

The backlash against Blizzard is palpable, and it could damage the studio's brand and business. GameDaily chats with analysts about Blizzard's bottom line, and PR veterans about crisis management. [UPDATE]

[Update #2 10/11/2019] The punches continue to be thrown. With Blizzard's BlizzCon only three weeks away, and the company still not having properly addressed this controversy, it's hard to imagine that anything productive will happen for the studio at its own event. The internet has been filled with cries for full-on protests to support Blitzchung, Hong Kong, and freedom of speech, and it seems that this is indeed the direction BlizzCon is headed in. 

The digital rights group, Fight for the Future, which has previously organized protests against SOPA, for net neutrality, and against government surveillance, announced today that it intends to team with gamers, redditors, and other internet freedom activists to set up a protest at BlizzCon. 

“This is not going away,” said Evan Greer, deputy director of Fight for the Future (pronouns: she/her), “Blizzard, and other companies who are engaging in censorship on behalf of an authoritarian government, are not going to get away with it. They have no idea what kind of Internet shitstorm they’ve unleashed. We’re going to make an example out of them to make sure that all companies know that throwing human rights and free expression under the bus to make some extra money will not be tolerated.”

In addition to organizing a protest, Fight for the Future has established a scorecard of sorts, called Gamers for Freedom, to keep track of which game companies "have publicly pledged to not censor players the way Blizzard did, and which companies may already be caving to pressure from authoritarian governments." 

[Update 10/11/2019] Blizzard has yet to issue a formal response to the ongoing controversy surrounding its decision to ban Blitzchung, and the backlash is only deepening.

Today we've learned that following Brian Kibler's statement (see full story below), a second Hearthstone caster has decided to quit. Nathan “Admirable” Zamora has backed out of the Hearthstone Grandmasters broadcast for the remainder of the season. In a statement on Twitter (h/t Polygon), Zamora commented, "Blitzchung’s actions to support Hong Kong speak to me far more than I could have imagined. It takes courage to stand up for what you believe in, and to make sacrifices in the process. His actions are inspiring to me, and I support him wholeheartedly.”

Other casters, such as  Simon Welch and Alex Baguley, have also voiced their disapproval of Blizzard's actions but have decided to honor the remainder of their contracts for Hearthstone.

Blizzard continues to "assess" the situation but its continual appeasement of China's government speaks louder than words. Earlier this week, esports consultant Rod Breslau pointed out that Blizzard actually cut away from a collegiate Hearthstone championship stream when American University students held up a "Free Hong Kong, boycott Blizzard" poster. 

Original story (10/10/2019)

Blizzard, which for most of its life dating back to 1991 has been known simply for making highly polished games that people have enjoyed worldwide, has been thrown into the fire. Following reports earlier this week that revealed Blizzard’s controversial decision to ban Hearthstone pro player Blitzchung, a #boycottblizzard movement has taken the world by storm. Fans have been deleting their Blizzard accounts, other esports pros have been protesting Blizzard in solidarity with Blitzchung (whose real name is Ng Wai Chung), and even a small number of Blizzard’s own employees staged a walkout to voice their disapproval of Blizzard’s decision to appease an authoritarian Chinese regime.

Chung, who had called for the liberation of Hong Kong while donning a gas mask on a livestream, not only received a ban for a full year, but his winnings from the Grandmasters tournament were confiscated and he was forced to cut ties with the two Taiwanese casters he conducted the stream with.

"It's a violation of free speech," Chung told Engadget. "I am pretty sure I won't get that kind of punishment if my speech was pro-China-government.

“The protests in Hong Kong have lasted for almost four months. I love Hong Kong, this is my home where I live and grow up. I can't just sit there doing nothing and watching our freedom being destroyed bit by bit."

Blizzard has been nearly silent on the entire fiasco, only telling Engadget that it’s been “assessing the situation.” Meanwhile, the studio’s once golden brand has taken on a much darker sheen. 

“The action Blizzard took against the player was pretty appalling but not surprising,” a longtime Blizzard employee told The Daily Beast. “Blizzard makes a lot of money in China, but now the company is in this awkward position where we can’t abide by our values.”

As noted by The Washington Post, pro player and respected streamer Brian Kibler said in a Twitch interview on Wednesday that he may never be able to work with Hearthstone again. 

“I will not be a smiling face on camera that tacitly endorses this decision,” Kibler said in a blog post, while calling Blitzchung very brave and commending him for his fortitude. “Unless something changes, I will have no involvement in Grandmasters moving forward.”

Some consumers may be deliberately boycotting sales of Blizzard titles as well. It’s a point to take with a grain of salt for now, but according to Kinda Funny host (and former Game Informer senior editor), Imran Khan, Overwatch preorders have been getting canceled. He tweeted, “Talked to a friend that works Nintendo customer service, says that they have been getting ‘a surprising number’ of requests to cancel Overwatch preorders. Probably a drop in the bucket, but interesting to hear.”

Blizzard may be willing to sacrifice a few sales in Western markets to ensure it still has access to China’s vast player base of roughly 620 million people. But many players are hoping to leverage Overwatch character Mei as the face of the Hong Kong protests in an effort to get the game banned in China. If that happens, then Blizzard’s bottom line would take a serious hit. 

As DFC Intelligence boss David Cole told GameDaily, “It is a choice between two bad business decisions: 1. Support free speech and risk losing all business in China; or 2) Keep China happy and be viewed outside China as politically incorrect.

“It is a pretty big deal for Blizzard’s growth. Much of Activision Blizzard’s stock valuation is based on growth potential in markets like China. You can be sure if Blizzard is seen as supporting Hong Kong, they will be banned in China. They are making a business decision that public opinion outside China will not result in as big a loss as losing all of China.”

He added, “Asia pacific overall was about 12% of revenue in [their] latest quarter (ending 6/30) but has been as high as 17% of total ATVI revenue. That would be a big chunk to lose and it is also seen as a growth area…you also have Call of Duty: Mobile which wants to launch in China.

“Really it is an ugly choice. Do you cut off your arm or your leg?”

It’s also important to recognize that this is not a situation unique to Blizzard. Whether or not to placate an authoritarian government is a choice for any company seeking to do business in China. 

“Beyond games, you can look at the NBA. Tencent, which works with many large game companies coming to China, has a deal with the NBA for streaming in China. Houston Rockets’ GM does a tweet in support of Hong Kong and Tencent stops streaming… Houston Rockets games and China stores remove Rockets merchandise,” noted Cole. 

One of the many pieces of Hong Kong protest art featuring Mei making the rounds on the internet
One of the many pieces of Hong Kong protest art featuring Mei making the rounds on the internet

Apple and Google have also gotten involved, as both mega corporations decided to pull Hong Kong protest apps from their digital stores, according to the Wall Street Journal. The Google Play store removed a mobile game called The Revolution of Our Times, which Google claimed violated rules related to “sensitive events.” Apple, meanwhile, took down a crowdsourced map utility called HKmap.live, which enabled Hong Kong protesters to track police activity, noting that it endangered law enforcement and citizens.

Appeasing China’s government, however unpopular (and questionably ethical), from a business standpoint is the more lucrative option for all of these companies. For Blizzard, backlash from within China is likely to be minimal, said Joost van Dreunen, Managing Director of Nielsen-owned SuperData. 

“The short term repercussions on this PR disaster will likely be limited. Anecdotally, Chinese gamers seem indifferent, and despite the global upheaval from the last 24 hours, it will likely die down,” van Dreunen remarked to GameDaily.

“In terms of market repercussions, the company will be fine. For one, given that China is a socialist economy, or at least claims it is, I have a hard time believing that any form of retribution would be swift or particularly well-organized. They're still working on about a year's worth backlog of game approvals, so I doubt that they have the administrative agility to act on this immediately, or at all.

“Long-term, however, Blizzard should do some soul searching. Lots of creative firms have a strong opinion on the social, cultural and political realities of our time. Game companies, especially the publicly traded kind, are not exempt from this. When Nike got called out for endorsing slave labor, it took responsibility and re-built its internal belief structure from the ground up. My recommendation is that Blizzard and its peers think deep and hard about the values they purport to uphold in relation to their respective company strategies.”

And that’s the crux of the matter: when values and ethics clash with profits, what do corporations do? If Blizzard, and its parent Activision Blizzard, want to succeed at the long game, paying attention to ethics and upholding its own values does matter. 

Right now, the company has stirred the hornet’s nest and is building up levels of resentment that only organizations like EA or the ESA have previously experienced. Blizzard’s silence while it “assesses” is a statement in and of itself, and the entire company now faces a public relations crisis. According to one PR veteran, who wished to remain anonymous, the Blizzard tactic at the moment is to see if the whole thing will blow over. 

“Chinese companies have purchased shares of almost every gaming company in America/the West – it extends so far beyond what is publicly out there right now – almost every movie, almost every game people play, has ties to China. It’s unfortunate that a public precedent has been set by Activision with this move, one that might become the new norm as more companies fall all over themselves to please the Chinese market, which is intertwined tightly with the Chinese government,” our veteran PR source commented.

“In the end, this will blow over, like everything does in our cancel-and-forget culture. As long as shareholders are happy and games keep churning profits, nothing will change because it doesn’t have to. The executives and the PR department both know this. ‘Assessing the situation’ just means they are buying time to see how bad this gets – that’s the truth. They are waiting to see if they actually have to do something – it’s duck-and-cover mode.”

The PR veteran added that, ultimately, PR tactics likely can’t fix this situation: “They’ve essentially told American (and Western gamers as a whole) that they don’t share the same beliefs or values about free speech and basic human rights, and it won’t matter in the long run. What they lose in America and the West, they gain tenfold in China.

“What they should be doing is listening to the fans who made them successful in the first place and remember that without human rights, nothing matters. Sadly, I’m not sure their crisis PR team is giving them that same advice. Long live [Epic CEO] Tim Sweeney for standing up to this type of behavior and drawing a line in the sand with absolutely no reservations. That’s the difference between companies who make decisions for shareholders, and companies who have actual principles and values.”

If you’re looking to give Blizzard the benefit of the doubt, however, PR specialist Tom Ohle, director of Evolve PR, stressed that crisis management can move more slowly than we’d all like, especially at massive, global companies.

“We have a regional branch of a major multinational corporation banning a player for political reasons; no matter how you feel about the incident, it's worth realizing that in a company of that size, it can take time for all of the appropriate stakeholders to be informed, to convene to discuss possible action, and then to actually take that action,” he explained. “With a company of Blizzard's stature—and taking into account the fact that they're a public company, or at least part of one—there are ramifications to any action they take, and in times of crisis it can be difficult to balance the urge to take appropriate action with a desire to act quickly. 

“Generally in crisis communications, you're making a call between addressing an issue as quickly and as decisively as possible, or just remaining silent to see if it blows over. China is...a big market for Blizzard, and reversing their decision on the ban, condemning the actions of the regional branch, etc., could have serious financial and business implications, and would make a significant political statement. And when you have to answer to shareholders whose primary concern is so often the return on their investment, that can be a tough call to make. Considering that there's bound to be some other major news, crisis, drama, or whatever that hits in the coming days—most of us seem to have fairly short attention spans these days—one might make the case for waiting to see if it blows over... but I've always been a supporter of transparency and an honest, open conversation with your fans, shareholders, or whomever.”

Ohle remarked that it’s “only been three days,” which to most of us, as tensions build and backlash escalates, feels like a lifetime. But Ohle believes Blizzard is in the midst of putting together a statement, and it’s critical that they get it right.

“I think it's important that their response be well reasoned [and] comprehensive. The online discourse has already taken on a life of its own, and no matter what action Blizzard takes, you're going to have people on all sides: those who appreciate the response and are happy to move on; those who say the action isn't enough or is just motivated by the company giving in to public pressure; those who outright don't accept the response and argue that the banning never should have happened in the first place; and everyone in between. It's not an issue that can be contained, so there probably isn't a huge motivation to act super quickly; a day or two probably won't make a massive difference,” he said.

What Blizzard did to Blitzchung, most would agree, was flatout reprehensible, but this is about much more than one gaming company. The entire U.S. is in the middle of a trade war with China (one that’s threatened to put tariffs on game consoles and more), and game companies need to be prepared for how they might respond to foreign entities.

As van Dreunen told us, “The games industry and its key protagonists are struggling with the demands and affordances that come with being a global, mainstream form of entertainment. Hollywood has understood this for years. So, too, has the music industry. The games industry has to ask itself where it stands on geo-political issues, and where and with whom it does business. Games are relatively new to these types of conversations. Now's a good time as any to start that dialogue.”

Blizzard, it’s your move. You can still take a stand. Don’t be a Hanzo Main.

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Editor-in-Chief

James has been covering the games industry since the early 2000s and was previously the editor of GamesIndustry.biz. He loves Zelda, Metroidvania-style games, action adventure and single-player narratives. He's also the proud father of twin boys and is obsessed with good coffee and Yankees baseball. You can reach him @bright_pixels on Twitter or you can email him at james.brightman@gamedaily.biz.

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