Blizzard terminates a 14-year licensing agreement with NetEase in China

Blizzard Activision, the California-based gaming publisher behind global hits like World of Warcraft and Overwatch, will suspend most of its games in China due to the expiration of licensing agreements with NetEase, the country’s second-largest gaming company.

The announcement by Blizzard

The announcement by Blizzard marks the end of a 14-year licensing partnership between the two gaming titans. Blizzard has been delivering gaming services in China for 20 years through various companions, including Electronic Arts-backed The9.

The majority of Blizzard’s titles will cease operations in China in January 2023. World of Warcraft, Overwatch, the StarCraft series, Warcraft III: Reforged and Diablo III are among them. Blizzard said that Diablo Immortal’s co-development and publishing are covered by a separate agreement between the two companies. This could imply that the game will continue to be available in China.

Each company issued its statement explaining how the marriage came to an end.

According to Blizzard, the two parties have not reached an agreement to renew the agreements that are consistent with Blizzard’s operating principles and commitments to players and employees, and the agreements will expire in next January 2023.

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China’s State media react

The decision comes at a time when a silver lining is emerging in China’s gaming industry, which has been subjected to onerous regulations in recent years. The People’s Daily, China’s state media outlet, published an op-ed this week titled “the opportunity in the gaming industry cannot be missed,” sending Chinese game stocks soaring.

Blizzard, on the other hand, isn’t giving up on China and is looking for alternative publishing partners, which are required for foreign games that serve the market. ‘We’re extremely praising for the passion our Chinese community has shown over the almost twenty years we’ve been gaining our games to China through NetEase and other partners,’ said Mike Ybarra, president of Blizzard Entertainment. We are looking for alternatives to reintroduce our games to players.

Even if Blizzard finds a new partner, the process of reapplying for regulatory permits for its game franchise could be arduous. Following the implementation of a slew of strict regulations on the video game industry, China has significantly slowed the approval process.

NetEase responds

The partnership’s termination appears to have had little impact on NetEase’s bottom line. ‘The net incomes and net revenue of contribution from these licensed Blizzard games represented quiet single digits as a portion of NetEase’s total net revenues and net income in 2021 and the first 9 months of this year 2022,’ the company proclaimed in an announcement.

Nonetheless, NetEase’s stock dropped 11% on the news Thursday afternoon in Hong Kong.

Is NetEase implying that it is unhappy with how Blizzard operates in China? In any case, the divorce does not appear to be amicable. Indeed, Simon Zhu, NetEase Games’ president of global investment and partnership, posted a scathing message on LinkedIn:

As a gamer who has spent tens of thousands of hours in the worlds of Azeroth, Starcraft, and Overwatch, I am heartbroken that I will lose access to my account and memories next year. When what happened behind the scenes is revealed one day, developers and gamers will have a whole new level of understanding of how much damage a jerk can cause. I suppose bad for the players.

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FAQ

What games owned by Blizzard?

Blizzard Entertainment is a leading developer and publisher of entertainment software, best known for producing some of the industry’s most critically acclaimed titles, such as World of Warcraft®, Overwatch®, Hearthstone®, StarCraft®, and Diablo®.

What is Blizzard’s most popular game?

Blizzard Entertainment’s Top Ten GamesWorld of Warcraft is number one. Overwatch is the best game ever made. The first blizzard shooter, and it’s a good one…3 Diablo II… 4 Starcraft.

Is Blizzard bigger than Riot?

The current market capitalization of Blizzard Entertainment is $77.90B. Riot Games’ brand is currently valued at $3.52 billion.

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