Blizzard Entertainment, a leading game developer and publisher based in California, announced that it will not renew its licensing deal with Chinese game developer Netease. At noon on November 17, there were reports that another Chinese game company miHoYo would take over the deal. Regarding this report, a person close to miHoYo told Shanghai Securities Journal that this is just a rumor. Furthermore, miHoYo has been focusing on its own games since its establishment.
Some other reports said that Chinese tech giant Tencent will get involved but later on the same day the company responded that there was no relevant news internally for the time being. On the other hand, another firm Perfect World that was rumored to take over the license deal with Blizzard Entertainment in China saw its share price increase to a limit up.
It is worth mentioning that “at present, more than one Chinese game developer is competing for the agency deal of Blizzard Entertainment in China, but the US game company seems to have not made the final choice,” An employee of one game company who asked not to be named told 21st Century Business Herald.
On November 16, Blizzard Entertainment issued a statement saying that it will be suspending most game services in mainland China due to the expiration of current licensing agreements with China’s NetEase on January 23, 2023. This includes notable game titles such as World of Warcraft, Hearthstone, Warcraft III: Reforged, Overwatch, the StarCraft series, Diablo III, and Heroes of the Storm. Diablo Immortal’s co-development and publishing is covered under a separate agreement between the two companies.
Once this statement was released, it caused extensive discussion in the Chinese game community and many felt that the agreement was rather sudden. Some posted on social media, “Several games are in the period of being sold and promoted. How did the cooperation suddenly collapse?” “Will the money I spent be refunded?” “Hearthstone, what can I do without you!”
On the afternoon of November 17, NetEase released its third-quarter financial report. The service agency authorization of NetEase and Blizzard Entertainment in China will expire in January 2023 and will not be renewed. Games from Blizzard Entertainment contribute a low single digit to NetEase net income and net profit in 2021 and the first nine months of 2022. The expiration of authorization will not have a significant impact on NetEase‘s financial performance.
On the evening of November 17, in response to Activision Blizzard’s unilateral announcement that it would no longer renew its contract with NetEase, the Chinese company released “A Letter to Blizzard Gamers“. In the letter, NetEase stated that it had to accept Activision Blizzard’s decision to suspend cooperation with NetEase because it could not reach an agreement with Blizzard on key cooperation terms involving several factors, including sustainable operations, the Chinese market, and the core interests of players.
NetEase also stated that it will try its best to negotiate with Activision Blizzard to protect the interests of Chinese players. The company will strive to formulate plans, start related work such as refunds, as soon as possible, and will continue to inform players about the progress of related work through its official channels.