Microsoft and Activision have formed a new team within Blizzard to work on smaller 'AA' games based on existing IP

What you need to know

• Over the past few weeks, many King employees had switched their LinkedIn profiles from King to Blizzard.
• We can reveal that Microsoft and Activision have formed a new smaller team within Blizzard comprised of King and various other employees to work on "AA" games, based on existing Blizzard franchises like Overwatch, Warcraft, StarCraft, and beyond.
• Microsoft is keen to leverage its huge back catalog of franchises it acquired with its Activision-Blizzard purchase of previous years.

Over the past few weeks, various employees from Microsoft's King subsidiary have updated their LinkedIn profiles to reflect an interesting new career direction.

Last year, Microsoft completed its acquisition of Activision-Blizzard for a whopping $72 billion. The purchase gave it control over mega franchises like World of Warcraft, Call of Duty, and King mobile games like Candy Crush Saga. We're starting already to see the impact on Xbox's bottom line, with Microsoft reporting a huge 61% growth year-over-year in its gaming division , driven largely by its Activision-Blizzard operation across PC, gaming consoles, and mobile. Microsoft isn't done, though.

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Our sources indicate that Microsoft and Activision have approved the creation of a new team within its Blizzard subsidiary, comprised mostly with employees from King. Blizzard is known for beloved franchises like Warcraft, StarCraft, Diablo, and Overwatch, and Microsoft is keen to curate and serve these franchises more prolifically than Activision itself did previously. Military sci-fi strategy series StarCraft for example has essentially been on mothballs since StarCraft Remastered in 2017, and Xbox CEO Phil Spencer himself has name checked StarCraft during interviews about the acquisition in recent years. Still, you need teams to work on these classic franchises, and that's exactly what Microsoft is gearing up to do.

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To that end, we're told Microsoft and Activision's new team within Blizzard is tasked to work on "AA" smaller games based on existing franchises within the Blizzard universes. Given King's mobile expertise, it's possible that these will be mobile games aimed to support Xbox's planned mobile gaming store for iOS and Android — although we're not entirely sure that they'll be restricted specifically to mobile. Given Microsoft's platform agnostic strategy across mobile, PC, and console, it's entirely possible that any fresh projects could run across platforms. Microsoft CEO Satya Nadella recently described how it wants Xbox to focus on a three-pronged gaming approach across those endpoints, with Xbox console at its core.

Microsoft is exploring building games with smaller, more agile teams

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Sources tell me that Microsoft is keen to explore and experiment finding success out of smaller teams that are also integrated with the larger org, almost Nintendo-style for seamless collaboration. Microsoft and other big publishers are increasingly concerned about the monstrously ballooning costs facing AAA game development, and having studios cross-collaborate more closely is one way Microsoft is exploring reducing costs.

A lot of the biggest success stories in the industry in recent times have been unique ideas from smaller teams. Think of games like Balatro , Palworld , Vampire Survivors , Among Us, and even some of Microsoft's internal games like Sea of Thieves and Grounded . Many of these titles were built by comparatively small teams, and in some cases solo developers. Yet, many of these titles became wildly popular based on their innovative gameplay alone and in some cases, their agility to pivot to new trends. It's a shame, because you might be wondering why Microsoft decided that closed Hi-Fi Rush developer Tango Gameworks didn't fit into this strategy. From what I've been told it did. It was sadly only for its geographical location in Japan, making inter-studio collaboration logistically difficult. In any case, as player habits have evolved in recent years, the industry is undergoing something of a painful transition, and reducing costs is a big part of it.

Just this week, Destiny developer Bungie announced a large raft of layoffs that reflect the difficult times being faced by larger AAA teams. Destiny 2 is a hugely popular game but is also astronomically expensive to run and develop for. Comparable titles like World of Warcraft have a subscription fee, while others might have aggressive (or even predatory) in-app monetization to keep them cash flow positive. Overall play time hours have decreased according to most analyses on top, forcing expensive service games to rethink their approach.

"AA" games refer to titles built by smaller teams with lower budgets, compared to "AAA" titles. This new King studio is specifically geared up for agility, eschewing some of the bureaucratic bloat that can occur in bigger teams. Microsoft has also repositioned some of its existing studios around this thought process, with Halo developer 343i also taking on a more streamlined single-team organizational style, ditching its  siloed multi-team format of yesteryear which was often cited to me as having communication issues. The Verge also noted recently that Xbox has now moved into one departmental building at Redmond HQ, specifically to improve communication and collaboration.

What remains to be seen is exactly what the new King team may be working on. I for one, hope it's StarCrafty .