NetEase Inc. and Blizzard Entertainment have had a 14-year partnership that has come to an end after failing to reach an extension agreement.
The two sides had brought franchises like “StarCraft,” “Diablo,” “Overwatch” and “World of Warcraft,” to players in mainland China in an agreement that will end in January.
Blizzard has said that they will put a stop to game sales in China in the coming days. One of the titles to remain unaffected by this is “Diablo Immortal,” as it is covered by a separate licensing agreement that is long-term.
After this was announced, shares of NetEase fell 15%. Activision Blizzard’s share price and ongoing acquisition by Microsoft haven’t been affected.
In NetEase’s news release, chief executive William Ding explained that “material differences on key terms” was the main reason why the deal between the two companies has come to an end. It was also stated that the games represented a low-single-digit percentage of the Hangzhou-based company’s total profit. Although the dissolving partnership has been blamed on antitrust, player data control, and ownership of intellectual property, a NetEase executive wrote differently on LinkedIn.
Simon Zhu, president for global investment and partnership at NetEase, said he was “heartbroken” over losing access to his “World of Warcraft” account and the “memories” that are associated with it.
“One day, when what has happened behind the scene could be told, developers and gamers will have a whole new level [of] understanding of how much damage a jerk can make. Feel terrible for players who lived in those worlds,” Zhu said.
This isn’t the first time Blizzard’s distribution partner in China has changed. Before NetEase, Blizzard’s partner was the Shanghai-based The9 from 2004 to 2008. It was after that partnership ended that NetEase jumped in as the new local publisher. According to Chinese regulations, foreign gaming companies cannot distribute titles themselves, they have to be through a local publisher.
It’s possible for another gaming company to provide a gateway for Blizzard back into China. The country provided at least 3% of last year’s revenue for Activision Blizzard and brought in over $400 million in esports revenue and more than 400 million fans. Blizzard even has several Chinese teams among its competitive gaming organizations.
Blizzard Entertainment President Mika Ybarra released a statement about the ending of game services in China that alludes to the company searching for a new publisher.
“We’re immensely grateful for the passion our Chinese community has shown throughout the nearly 20 years we’ve been bringing our games to China through NetEase and other partners,” said Ybarra. “Their enthusiasm and creativity inspire us, and we are looking for alternatives to bring our games back to players in the future.”
