California-based publishing giant Blizzard Entertainment has announced that it will be suspending its gaming services in China. This follows the expiration of its licensing agreement with the Chinese gaming company NetEase, which has been in effect since 2008.
Some of Blizzard’s most popular games include World of Warcraft, Overwatch, Hearthstone, and the StarCraft series, and the end of this deal means that these games, among others, could soon go offline in Mainland China.
According to Blizzard’s statement, all new game sales in the coming days will be suspended and “Chinese players will be receiving details of how this will work soon.” However, upcoming releases for World of Warcraft: Dragonflight, Hearthstone: March of the Lich King, and season 2 of Overwatch 2 are still greenlit to proceed later this year.
Commitment To Players Foremost, Say Blizzard And Netease
Blizzard’s statement read, “The two parties have not reached a deal to renew the agreements that are consistent with Blizzard’s operating principles and commitments to players and employees.” The current agreement will expire in January 2023.
Their president Mike Ybarra expressed gratitude for the “passion our Chinese community has shown” throughout the 14 years of their partnership. He says that Blizzard is still open to partnering with other Chinese companies, adding, “Their enthusiasm and creativity inspire us, and we are looking for alternatives to bring our games back to players in the future.”
The statement from NetEase reads similarly. “We have put in a great deal of effort and tried with our utmost sincerity to negotiate with Activision Blizzard,” NetEase says, “so that we could continue our collaboration and serve the many dedicated players in China.”
Netease Stocks Plummet After Deal Falls Through
Blizzard said last week that their partnership with NetEase had accounted for three percent of its net revenue last year. NetEase also insists that the deal falling through will have “no material impact” on their overall revenue, stating that their net income from Blizzard games “represented low single digits” as a percentage of their total net revenue since 2021.” Still, the NetEase shares plummeted by 14.5% in Hong Kong after news of the split broke.
The two companies seem to have very different financial goals at the moment. Activision Blizzard is readying itself for a mega merger with Microsoft, with the EU and PlayStation standing in its way, while NetEase is focused on a more broad-themed global expansion.
What Really Happened That Caused The Parties To Split?
The two companies’ inability to reach an agreement, as well as a highlighting of their “commitment to principles and players” suggests a split that was somewhat less than amicable. A cryptic LinkedIn post from Simon Zhu, NetEase’s president of global investment and partnership, is another indicator that there’s more to this split than meets the eye.
“As a gamer who spent ten thousand hours in the world of Azeroth, starcraft and overwatch, I feel so heartbroken as I will [no] longer have the access to my account and memories next year,” Zhu wrote. “One day, when what has happened behind the [scenes] 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.”
The gaming industry in China is a highly lucrative market, but it has its drawbacks as well. Foreign developers need to partner with a local publisher in order to distribute games in the country, and the content is also heavily censored. The Chinese government has also imposed heavy regulations on the video game approval process, and all new releases are controlled through a licensing system. If Blizzard does find another partner in China, they will need to reapply for all their gaming licenses and the process could take months, or even years.