Let's look at who Blizzard lost to Arena.net:
Mike O'Brien, Founder and Programmer, was also a company director of Blizzard, where he worked for four and one-half years. He was most recently the team lead and lead programmer of Warcraft III, and personally developed the game's 3D rendering engine. Mike was the original creator and architect of Battle.net and was lead programmer on that project. He was also a senior programmer on StarCraft and Diablo, as well as the author of the network code for both games, and was a programmer on Warcraft II. Mike was featured as one of the 25 most influential people in the game industry in PC Gamer's September 1999 cover story, "Game Gods."
Patrick Wyatt, Founder and Programmer, was previously Blizzard Entertainment's Vice President of Research and Development. He was most recently the team lead and lead programmer of Battle.net. Previously, Pat was a senior programmer on both StarCraft and Diablo, and wrote the multiplayer code for both games. He was also a producer and senior programmer on Warcraft II, for which he wrote both the networking and multiplayer code, and producer and lead programmer for Warcraft I. Pat also worked on Lost Vikings, Battle Chess, Rock and Roll Racing, Death and Return of Superman, and Justice League Task Force. Pat was employed at Blizzard more than eight years.
Jeff Strain, Founder and Programmer, was the team lead and lead programmer of Blizzard's massively multiplayer role-playing game, World of Warcraft. He was also a senior programmer on both Warcraft III and StarCraft, and a programmer on Diablo. Jeff was the creator of the StarCraft Campaign Editor and was employed at Blizzard for four years.
James Phinney, Game Designer, started as a programmer at Chaos Studios, which later became Blizzard Entertainment. He worked on Warcraft II and Diablo, then as lead designer and producer on StarCraft. James also wrote the story and dialogue for Shiny Entertainment's Sacrifice.
When the freaking Team Leader and Lead Programmer of a project leaves, you know the project went down the toilet at some point. In this case, that project was World of Warcraft.