Vivendi Games bought them in the late 90s and started trading long-term quality for results. Blizzard North, Diablo creators, were laid off due to slow development of D3 in 2005. Insiders say that the culture shifted slowly towards business and away from caring about games per se. Blizzard's big thing was that they'd innovate and build without fear of costs, famously canceling numerous games (Titan, eg) with no ROI because they felt it just wasn't right.

In 2008, Activision bought Vivendi and took Blizzard along with them. For a while now we've just been seeing the long-term effects of those shorter-term profitability policies. It's sad, but it kind of happened a long time ago.