Evil is Everywhere
Diablo Immortal is a Free-to-Play (F2P) Massively Multiplayer Online (MMO) Action Role-Playing Game (RPG) developed by Blizzard Entertainment and NetEase. Announced at Blizzcon 2018, Blizzard’s annual gaming convention to promote their franchises to fans and media, Diablo Immortal was poorly received by attendees who were anticipating the franchise’s next premium AAA release, garnering a high number of dislikes on trailers and criticism from the press and fans alike. Fast-forward to June 2, 2022, and the game was released for countries outside of Asia-Pacific regions on iOS and Android along with a beta PC release, with Asia-Pacific regions planned for June 23 but delayed and released on July 7.
The game’s Chinese release was also indefinitely delayed in mid-June. As of June 15, Diablo Immortal’s official account on Chinese social media service Weibo was banned (allegedly for making a post that crossed Beijing’s red line). Since the account was run by NetEase, it’s possible that Diablo Immortal may never see release in China, which, if true, would reduce the game’s long-term upside right out of the gate (TBD!). This news immediately caused a 10% drop in NetEase’s stock price. The game also didn’t see release in Belgium and the Netherlands due to their strict laws against the use of loot boxes in games.
Diablo Immortal has had a mixed reception since launch, with praise given for adapting the Diablo gameplay experience to mobile and the high production values, while it's F2P business model with its focus on microtransactions drew the most criticism, resulting in it becoming one of the lowest user-rated games on Metacritic and several streamers quitting the game in response. Unfazed by this, Diablo Immortal on iOS and Android has received +12M downloads and generated about $40M in revenue in its first month, with 40% of that revenue coming from the US.
Activision Blizzard’s stock (which, granted, is mostly influenced by Microsoft’s acquisition, which isn’t yet a done deal) remained unaffected by Diablo Immortal’s release, signaling not a failure but not a game-changing success either by Blizzard’s standards. $40M in revenue is a strong first month for Diablo Immortal outside of China, but for it to become a massive and sustained hit and truly move the needle for Activision Blizzard (which generates over $8B in annual revenue), the game faces an uphill battle that leaves a lot to deep-dive into, starting with:
- What is the F2P MMO Action RPG Diablo Immortal? Where does it fit in the RPG market?
- Who is NetEase and why are they the perfect partner for Blizzard?
- How did the Diablo franchise adapt the Free-to-Play business model?
- Is Diablo Immortal more Free-to-Play or Pay-to-Win? Can Blizzard and NetEase achieve a balance for long-term success?
- Will the game ultimately provide the kind of upside Activision Blizzard hopes for or not?
What is Diablo iMMOrtal?
Blizzard calls Diablo Immortal an MMO Action RPG that is F2P on Mobile and PC. Let’s examine this statement in reverse: Diablo Immortal is built from the ground up as a mobile-first title with a PC port, similar to RPGs like Raid: Shadow Legends supporting a PC port. Diablo Immortal is also the first game in the Diablo series with a F2P business model with in-app purchases and seasonal battle passes.
The gameplay involving real-time, visceral combat with character, skill, and gear progression makes it an Action RPG, similar to the Diablo games that came before. From a gameplay perspective, Hoyoverse’s Genshin Impact, Netmarble’s MARVEL Future Revolution, as well as the recently released Ni no Kuni: Cross Worlds are also categorized as Action RPGs.
The MMO aspect is characterized by having a large number of players on the same server being able to freely interact with each other in a persistent game world. Each zone in Diablo Immortal hosts a number of players who can chat, interact, and join forces to tackle various quests and events together. On PC, Blizzard pioneered the genre-defining MMORPG with World of Warcraft. On mobile, the MMORPG market is led by NetEase Games’ Fantasy Westward Journey, followed by NCSOFT’s Lineage series of games.
Looking at the first month’s performance in the US, Unified, Diablo Immortal tops the charts for the RPG genre with 4.3M downloads and $15.9M in revenue. Also in terms of revenue, Diablo Immortal performed on par with Call of Duty Mobile, another Activision Blizzard title (albeit a shooter), but pales in comparison to its staggering 23M downloads. The breakout hit Genshin Impact, an Action Open World Adventure game usually comped with gacha RPGs, excels with almost $30M in first month revenue.
The Revenue Per Download (RPD) trend in the US, Unified, aligned by launch, shows Diablo Immortal leading the RPGs in the first month with an RPD of $3.73 and performing stronger than #2 Raid: Shadow Legend’s RPD of $2.04. Genshin Impact remains an outlier here as well, with a $12.89 RPD, resulting from higher revenue but much lower downloads.
Of course, this is just the US (and the China market would likely be even more important if it ever were to launch there), but narrowing in on this market helps us identify clear performance trends. When looking closer at the early performance of Diablo Immortal in the US, the trends are worrying. The downloads are significantly down to 20k/day, with the first week accounting for 83% of the first month’s downloads. The daily revenue is trickling down as well, from $600k/day to $500k/day and further. With the US trending negatively and accounting for 40% of its global revenue, Diablo Immortal needs a release in China to boost its performance and succeed at the level Activision Blizzard is aiming for. This is due to the state of the market Diablo Immortal is competing in and the elusive subgenre of RPGs that is MMORPGs.
The Mobile MMORPG Market
The mobile MMORPG market is a subset of the RPG market, which is dominated by turn-based, hero collector RPGs like Aristocrat Technologies’ Raid: Shadow Legends and Take-Two Interactive’s Empires & Puzzles predominantly in the West, making +$200М in the last 12 months (Jun 29, 2021 - Jun 28, 2022), and Sony Corporation’s Fate/Grand Order and CyberAgent’s Uma Musume Pretty Derby predominantly in the East, making +$500М in the last 12 months.
MMORPGs make 4 of the top 10 grossing mobile RPGs worldwide, led by NetEase’s Fantasy Westward Journey and NCSOFT’s Lineage W, making +$400М in the last 12 months. NetEase’s top games in the MMORPG subgenre, Fantasy Westward Journey (at #1) and Westward Journey (at #8), have turn-based battle systems that set them apart from the NCSOFT’s Lineage titles (at #2, #4, and #5) which are real-time MMO Action RPGs.
NetEase has experience in the MMO Action RPG market with titles like Heavenly Mandate (#18) and A Chinese Ghost Story (#19), both making +$3.5M in the last 12 months. At the time Diablo Immortal was announced to be a collaboration between Blizzard and NetEase, NetEase already had F2P MMO Action RPGs like Crusaders of Light and Endless of God. When fans raised concerns over their similarity to Diablo Immortal, Blizzard was quick to respond that ‘Diablo Immortal is built from the ground up.’
The Fantasy Westward Journey and Westward Journey MMOs accounted for 26.4% of NetEase Games’ $2.29B revenue over the last 12 months. As of 2021, the multi-platform Westward Journey games have grossed over $8.3B in revenue, making it into the list of the highest grossing video game franchises of all time. Harry Potter Magic Awakened, an upcoming Collectable Card Game (CCG) with MMO and RPG elements, has already grossed $11.66M since its limited release in the Greater China region in September 2021. NetEase operates primarily in China, which accounts for 75% of its net revenue, with 16% coming from Japan and just 3% from the US.
Similar to the worldwide mobile RPG market trends, the US RPG market is dominated by turn-based, hero collector RPGs more suited for the region like Aristocrat Technologies’ Raid: Shadow Legends and Scopely’s MARVEL Strike Force, making $149M and $128M in the last 12 months in the US respectively. MMORPGs, on the other hand, don’t make it to the top grossing RPGs list till #16 NEXON Company’s Maple Story M, making $18M in the last 12 months in the US.
This shows a stark contrast between the US and China/Japan/South Korea markets: the top 5 games in the MMORPG genre gross over $250-480M annually in those latter regions versus the US where they fall steeply in the range of just $9-18M. With Diablo Immortal available for just 1 month in the last 12 months period, it's already at #2, bringing in $15.9M in the US.
Looking at the US RPG market for the first month since the launch of Diablo Immortal, it has dominated the charts with $15.9M in revenue, with all successive, mature titles making around $11M in comparison. One game curiously missing from these lists is Genshin Impact as it is categorized as an Action Open-World Adventure game. When looking at the US in the same timeframe, Genshin Impact made $11.7M, behind Diablo Immortal’s $15.9M.
The MMORPG genre doesn’t have a strong foothold in the US, whereas its performance in China, Japan, and South Korea makes them one of the best-performing genres in mobile F2P. With NetEase’s expertise in the Eastern gaming market and Blizzard’s expertise in making IPs that resonate with the West, Diablo Immortal’s challenging goal is to achieve success in both regions at a scale that Activision Blizzard finds worthwhile to pursue investment in for years of live ops with NetEase.
“We know how to make ‘Diablo’ play like ‘Diablo,’ and we have a good sense about how to take that to a midcore audience,” said Allen Adham, Blizzard Senior Vice President, speaking to Variety in 2018. “NetEase is a big player in China. So the two teams' goal is to create a title that’s top ten in more than one region, which is incredibly rare.” In other words, one key to unlocking Diablo Immortal’s full potential is Activision Blizzard’s partnership with NetEase.
NetEase’s History with Activision Blizzard
NetEase Games is a Chinese game development and publishing company that operates some of the most popular PC and mobile games like Fantasy Westward Journey and Knives Out, primarily in China and Japan. In the top companies by revenue in the F2P mobile worldwide market, NetEase ranks at #2 behind Tencent, followed by Activision Blizzard at #3.
NetEase partners with various studios to operate Chinese versions of their games, such as:
- Blizzard for World of Warcraft, StarCraft II, Diablo III, Hearthstone, and Overwatch
- Microsoft (Mojang Studios) for Minecraft: China Edition
- Thatgamecompany for Sky: Children of Light
China is the proven ground for Blizzard IPs, with the World of Warcraft 2016 film, the highest-grossing video game adaptation of all time, making over $225M in China after it underperformed in the US market generating only $47.4M. This success was partly attributed to game IPs’ popularity in China, with an estimated 50% of the World of Warcraft player base coming from there and being run by NetEase.
NetEase is also growing to be a more global company through partnerships like:
- with Blizzard on Diablo Immortal
- with Warner Bros. Games (Portkey Games) on Harry Potter: Magic Awakened
- with Warner Bros. Games on The Lord of the Rings: Rise to War
- with Behavior Interactive on Dead by Daylight Mobile
With Diablo Immortal, NetEase brings the expertise of running the most successful MMORPGs in the world (mainly China), and Blizzard brings the expertise from the Diablo IP and its core gameplay. What makes NetEase the best partner for Blizzard is its past performance in running Blizzard IP games in China as well as past experience in building and operating MMO Action RPGs in Mobile Free-to-Play, which is perfect for building a F2P mobile Diablo experience.
Unholy Trinity: The Creative Pillars of a Diablo Experience
That’s enough business perspective for now; let’s dig into the game design! At the core of the Diablo experience is its fast-paced, real-time action gameplay, battling demons and collecting loot, and deep RPG progression systems. Diablo Immortal manages to bring this experience to mobile with a seamless transition to touch controls and superior production values. The twin-stick type of controls popular in shooters and MOBAs — with the left for movement and right for aiming skills — fit Diablo like a glove. If anything, the fight against the Burning Hells on mobile feels like a more tactile, intimate experience with its camera up close and responsive twitch controls.
Every enemy downed in a Diablo game bursts like a piñata filled with loot items that rain down for players to collect. According to the original Diablo’s designers, David Brevik and Erich Schaefer, the game was built around killing and looting, leaving the player with an addictive feeling of slaying just one more monster and collecting just one more piece of loot. Killing was akin to pulling the lever of a slot machine and anticipating for something good to come out of it.
This loot system governing what drops has since been an inspiration for creating slot-games-like addiction for their namesake system of ‘loot boxes.’ Diablo also inspired the color coding that's still widely used to signify loot rarity — gray for Common, green for Uncommon, blue for Rare, and gold for Legendary. It has since evolved into the loot box/gacha systems of today, moving from defeating enemies to microtransactions for acquiring loot.
Any time invested in a Diablo experience also results in progress across several vectors:
- Completing tasks, quests, and achievements that lead to…
- Growth in Power for a character and their equipment, leveling up in stats and skills, and upgrading and ranking up items that lead to…
- Rising social status on rankings and leaderboards to become one of the most powerful players on a server.
Welcome to Sanctuary
After the hefty 3.4 GB initial install and a patch of an additional 9.5 GB, players enter the world of Sanctuary, choosing one of the 6 classic Classes available at launch, each with their own distinct playstyles, (with more to come in later updates):
- Barbarian: (Melee, Physical) savage warriors
- Demon Hunter: (Ranged, Physical) relentless vigilantes
- Wizard: (Ranged, Magical) renegade spellcasters
- Crusader: (Melee, Hybrid) unbending champions
- Monk: (Melee, Hybrid) sacred martial artists
- Necromancer: (Summoning, Magical) masters of life and death
Diablo Immortal is set between the events of Diablo II and III in the dark realm of Sanctuary, where angels and demons wage an endless war for domination. An object of immense power, the Worldstone that created the very world of Sanctuary, lies corrupted and shattered, and players are tasked with exploring the war-torn world and collecting all the fragments to prevent the Lord of Terror’s return.
This simple plot (Avengers/Thanos/Infinity Stones), unravelling at a bite-sized pace, for the Main Quest sets players on a path to explore the world, which is divided into eight zones with unique themes, dungeons, and enemies. The Main Quest also functions as a tutorial for several game systems like gear and character progression, raids, and crafting that unlock spread across the ~26 hour story campaign and level 60 cap, often weaving in the dungeons and progression systems into the narrative.
Completing the Main Quest and hitting the level 60 cap unlocks further progression in the form of Paragon leveling — a system first introduced in Diablo III. Players gain access to Paragon Skill Trees with nodes that are unlocked using points earned from raising Paragon levels. These enable powerful and varied character customizations to compete in end-game activities.
The Makings of a Champion
As an action RPG with one playable character, the onus is on the items that provide players with continuous avenues to make progress. They also provide choice and depth and give players the freedom to transform and develop their character as per their liking. Players have access to 12 gear slots:
- 6 Primary Gear slots that cover the Head, Torso, Shoulders, Arms, and Legs that can be equipped with Legendary gear with skill-altering effects that change the character’s appearance, and…
- 6 Secondary gear slots that supplement character stats and attributes.
Gear comes in a range of rarities — Common to Legendary — with increasing stats, skill modifiers, and unique visual treatment. They can be further upgraded by increasing their rank using crafting materials, a resource earned by salvaging (trashing) unwanted gear. A single charm slot enables players to equip a charm which can modify between one to five different skills.
Normal Gem Slots on the Secondary Gear are utilized by common gems that grant a boost to the gear they are slotted into. They can be ranked up by merging 3 gems of the same rank, leading to a merge-game-like 3^n progression. The Legendary Gem Slots available on Legendary gear — one for each of the six Primary Gear Slots — can be equipped with Legendary Gems: source of the greatest power, the deepest progression path, and the aspect that drew the most community criticism.
Legen … Wait for it … Dary!
Legendary Gems greatly enhance a character’s power and are primarily obtained from completing Elder Rifts — replayable, procedurally generated dungeons that can be completed in a few minutes. Players can add modifiers before starting an Elder Rift by equipping and consuming Rare or Legendary Crests that alter the challenge and the rewards. Crests can be purchased or earned, with free Legendary Gems being hard to find and limited to grind (2-3 per month), and free Rare Crests being easier to come by in daily rewards, purchasing from a merchant with daily limits and acquired on the battle pass.
Using Legendary Crests guarantees a Legendary Gem drop, and 1-10 Legendary Crests can be equipped on any single run of an Elder Rift. Legendary Gems come in categories of 1-Star, 2-Star, and 5-Star levels, with 5-Star being the most powerful and rare. 5-Star Legendary Gems are further categorized into Quality 2-5. The best way to understand this is to break down how they are pulled from the gacha upon completion of an Elder Rift. For every Legendary Crest activated, the Legendary Gem drop rates after completing an Elder Rift dungeon are:
- 1-Star: 75.395%
- 2-Star: 20.105%
- 5-Star: 4.5%
For every 5-Star gem drop, the Quality 2-5 drop rates are:
- 2/5-Star: 75% (effectively: 3.375%)
- 3/5-Star: 20% (effectively: 00.90%)
- 4/5-Star: 04% (effectively: 00.18%)
- 5/5-Star: 01% (effectively: 00.045%)
There is a pity system that guarantees 1 5-Star (Quality 2-5) Legendary Gem for every 50 Legendary Crests used.
Legendary Gems can be further ranked up to boost their stats by using duplicates and Gem Power, a resource obtained from breaking down (trashing) unwanted Legendary Gems. The amount of Gem Power and duplicates needed rises as per the star rating and rank of Legendary Gems, going up to 73 duplicates needed for a single 5/5-Star Legendary Gem to rank it up to the max Rank of 10.
Legendary Gems grant a new powerful, overarching stat called Resonance, which adds a bonus to all base attributes granted by all the equipped gear. The Resonance stat is the sum of all the Resonance power of equipped Legendary Gems and can be increased by equipping more powerful Legendary Gems and upgrading them. Legendary Gear equipped with a Rank 10 Legendary Gem can be Awakened by using a Dawning Echo — a $16 premium-only resource which allows for more Legendary Gems to be put into the Awakened gear, gaining further bonuses and increasing the overall Resonance.
The Legendary Crests are hard to come by for non-spenders, capped at buying one per month from an in-game merchant using soft currency and earning one from the monthly battle pass. For spenders, a Legendary Crest can be bought for $2.50, making an optimized 10 pulls (common across gacha games) to be worth $25. With the 5-Star Legendary Gems drop rate being low and multiple duplicates required to rank them up, this is an evergreen goal for all players to pursue.
This balance of the progression on Legendary Gems — being the most powerful items in the game while also being scarce for spenders and almost inaccessible to non-spenders — has garnered a fair amount of criticism. Since this system wasn’t available before release, the heavy caps on farming Legendary Crests are a fail-safe for an untested monetization strategy.
For non-spenders, the limited access to Legendary Crests with max caps per month creates too much friction to engage with them, causing too many pain points at higher end-game difficulties. For spenders, the low drop rates combined with the high amount of duplicates needed causes their value per spend to decrease, especially when Awakening allows for additional maxed-out gems to be socketed into maxed-out gear.
One way to address both problems would be to increase the caps on in-game acquisition of Legendary Crests and allow all players to farm more Legendary Gems by engaging in activity across the various game systems. This would improve the power progression of all players, especially non-spenders, which can help increase long-term retention and still maintain the significant power jump of spenders and whales.
Another problem to address is the premium-only resource Dawning Echo, which is needed to Awaken maxed out gear and gems. This is a clear signal for pay-to-progress power that isn’t common to any successful F2P titles, with most games opting to make all power progress earnable (slowly, across years) to ensure all players can envision making progress by investing enough time, not hitting any mandatory paywalls, and paying (by will) only to speed up progress - the perfect recipe for modern F2P titles. Learning about a $16 purchase requirement to progress beyond a point can alienate a majority of the audience.
This, combined with the cost of the Legendary Crests — 10 for $25 — and there being 10 5/5-Star Legendary Gems at launch with an effective 0.045% drop rate, makes the spend ceiling of maxing out 6 for a character to be upwards of 40k Legendary Crests costing $100k. With the spend ceiling being this high, it ensures that even the top spenders always have the goal of maxing out their character to pursue. At the same time, without much in the way of obfuscating this progression and its underlying costs, players are too close to recognizing the dollar or time value that Diablo Immortal is asking for, resulting in dropouts from the game and drawing community criticism for feeling immoral.
The Diablo series has been inspiring RPG gameplay systems since its inception. Mobile F2P games have further innovated on these systems at a fast pace. Diablo Immortal now enters a market with extremely sophisticated RPG systems that are tested and proven at scale. Genshin Impact, an Open World Action RPG, charges $20 for 10 pulls of the gacha that guarantees 1 4-Star Item (character or weapon), with the main attraction being fully voiced characters with unique move sets and animations that impact the gameplay significantly.
Raid: Shadow Legends, a hero collector RPG, drops fully realized 3D heroes of varying rarity, with their own unique stats, skills, animations, and sound bites. In Clash Royale, opening a chest rewards cards used in the core gameplay with unique effects. In both these cases, pulling from the gacha advances on stats underneath but also adds to the gameplay of strategizing with deck composition and making their presence more visual and tangible.
The gacha pulls in Diablo Immortal — the Legendary Gems — feel like they lack a visual, tangible quality, reducing them to stat bonuses that don’t affect the gameplay experience much apart from making killing monsters slightly more efficient. The skill-altering effects are too few and too far down the gem progression to feel like an immediate effect after making a pull. Overall, the gacha systems feels less tangibly satisfying when compared to what else is available on the market today.
One Day at a Time
One aspect that enables Diablo Immortal to be an effective F2P game is ensuring that players always have plenty of goals to pursue. The game is rich with activities for players to chase daily, making the game very sticky by encouraging player routines. Each objective has clear and simple goals, usually taking a few minutes to complete.
PvE Daily Activities:
- Claiming Free Daily Rewards in the Shop and Elder Rift Crest.
- Completing the First Kill of the Day.
- Bounties: hunting tasks, players can choose 4 at a time with a cap of 8 per day, taking about 5 minutes each. If players miss hitting their cap, the cap increases +4 per day to a max of 24.
- A Daily Featured Activity in the Codex rewards twice the progress on the Battle Pass.
- Complete Challenge Rifts to earn Daily Rewards.
PvP Faction Daily Activities:
- Daily Shadow Contracts, with a cap of 3 per day, increasing +1 per day to a max of 5.
- Raiding a Vault with other members, with a cap of 2 per day.
- Run 3 Elder Rifts for Faction bonuses.
- Complete in Battlegrounds when active, 3 times a day.
The game further entices players, regardless of playing solo or in groups, with dynamic events, filling in the monster bestiary, additional side quests, and weekly raid bosses. Even with various caps and a plethora of activities, features, and events available, players can spend 2-3 hours and multiple logins daily to be on top of everything. Since all activities involve the core gameplay of killing and looting with variable rewards, they feel extremely satisfying and rewarding in the moment-to-moment progression.
The Shop and Trading
The shop contains a standard RPG fare of materials, bundles, and currencies to be purchased by hard currency (Eternal Orbs) or directly using money. As players progress through the story campaign, they unlock one-time purchase bundles available for direct purchases. Bundles are discounted but also have a cap with daily or weekly limits. The Free Daily Reward pack is part of the bundles tab, nudging all players to visit this section daily.
Cosmetic sets are available for direct purchase, ranging from $15-$30, which can be applied on characters independent of their gear. Being an MMO where you constantly run across other players in PvE and PvP modes, cosmetics are highly effective. Having a few cosmetic sets being reward vectors for activities in-game could bolster all players’ customization capabilities and creativity to express themselves.
There are three services available for direct purchases in the shop:
- A $5 Monthly Battle Pass that unlocks a unique cosmetic set on the premium track. Players earn Battle Points through activities in the Codex to progress on the Battle Pass. Each tier rewards a large amount of XP along with items and currencies. Players can purchase individual ranks for 150 premium currency (~$2.40). Players can alternatively choose to purchase a Collector’s Monthly Battle Pass for $15 that unlocks the premium tack rewards and grants immediate cosmetic rewards and +10 ranks.
- A $10 Boon of Plenty that provides extra daily login rewards and can be purchased up to 3 times, stacking up to 90 days of daily gifts, along with instant benefits of increased inventory, remote access to the market, and additional market trading slots. Extra gifts can be claimed every 5 cumulative login days, with 2 Legendary Crests claimable for 30 cumulative login days.
- A $20 Prodigy’s Path that unlocks at Level 45 and rewards players at every 5 levels their character levels up, up to Paragon Level 85. The free track rewards crafting materials and gear, whereas the premium track rewards 2 Legendary Crests and rare upgrade materials on every tier.
With the cosmetic sets being one-time purchases ranging from $15-$30 per set, and services being limited to monthly purchases, ranging from $5-$20 per service, the repeat spend for Diablo Immortal relies on players buying the Legendary Crests to obtain Legendary Gems — 10 for $25. With the goal of continuously progressing in power for a character, whether to dominate the PvE dungeons at harder difficulties for increased rewards or to rank up in PvP leaderboards, investment in Legendary Gems is key.
The in-game Market in Diablo Immortal allows players to buy and sell items, mainly Gems, using Platinum. In the last iteration of the franchise, Diablo III, Blizzard experimented with a real-money Auction House for players to trade items with the goal of making it a convenient, secure alternative to third party services. However, it ended up circumventing the game’s loot-centric gameplay by providing instant real-money access to the best items. The Auction House was eventually shut down and the game was rebalanced in upcoming patches for better loot drops and additional customization options. For Diablo Immortal, the Market trades in Platinum, an in-game currency, and is the only way to trade items between players.
An odd decision that's touched in the fine print is that all Legendary Crests earned in-game, or through the Battle Pass and Bundles, when used, drop Legendary Gems that are bound. ‘Bound’ Legendary Gems cannot be sold at the Market and hence are unavailable for trading. Only Legendary Crests that are bought independently using premium currency, called Eternal Legendary Crests, when used, drop unbound Legendary Gems that are available for trade in the market. This wraps up selling in the market for all non-spenders, who can only use the market to buy Legendary Gems for a hard-to-find soft currency, Platinum. The Legendary Crests and Eternal Legendary Crests are visually very similar, and the difference between them is only clarified by reading their descriptions carefully.
There is a way for all players to earn crafting materials to craft sellable, unbound 1-5-Star Legendary Gems, but the process takes a very long time and requires players to be extremely lucky. This ensures that Legendary Gems, the most sought-after valuable items in the game, can only be sourced from real-money purchases for trading with other players. As different players would need different gems for their characters, depending on their builds and strengths, the Market trading allows for converting excess gems to Platinum for use to buy the required gems. Since there is an in-game limit to the minimum and maximum pricing when selling items, this system ensures the value of Legendary Gems, and by extension, the core gacha monetization pillar remains strong.
Finding the Right Balance
Blizzard has shown in the past, with Diablo III, that it holds strong to its gameplay’s first values — killing demons and getting gear was prioritized for the long-term experience over the short-term benefit of the real-money Auction House. The Auction House is long since gone, and Blizzard celebrated the 10th year anniversary of the game this May, with Season 26 now live. These teams know how to identify mistakes, make changes, and learn in live ops in order to make a long-lasting Diablo experience.
The Diablo experience has always been about killing, looting, and progressing in power for your character, primarily after the endgame, to pursue higher PvE challenges in the form of dungeons and PvP challenges in the form of various Leaderboards. With the Legendary-Gems-based economy being the dominant vector of this power progression, the common through-line for all players, irrespective of their different, individual motivations to play Diablo Immortal, leads to the experience feeling largely Pay-to-Win (in PvE and PvP alike).
With Blizzard’s and NetEase’s planned live ops going forward, new content, bosses, in-game events, and area expansions, they are bound to continually monitor player feedback and data to optimize for long-term LTV. Changing audience perception from Pay-to-Win to Free-to-Play, in an effort to increase engagement and retention, is largely tied to the tuning of drop rates and caps on the in-game economy, which are safer to start on the more aggressive side and loosen with accurate measurements and impact.
For Diablo Immortal to truly succeed at an ambitious and projected level of a top 10 title, it needs to maintain and grow its first month performance of $15.9M in the US, avoiding to fall under $15M/month in revenue. Critically, the game’s long-term upside — what could take it from a ~$150M annual revenue game to twice that number — also hinges largely on its ability to launch in China, which is a huge uncertainty. That uncertainty would likely have ripple effects for how management would think about reinvesting in live ops and directing more resources toward the game. Increasingly relying on the Chinese gaming market means heightened regulatory risk getting in the way of business results.
All that said, even with the Diablo community’s sentiments on Diablo Immortal feeling too Pay-to-Win, there is an expectation that the F2P RPG mobile community, along with Blizzard’s and NetEase’s ongoing live operations, will together find the balance of a rewarding progression while maintaining the spend depth to ensure that the game achieves long-term success.