License Deal Between Activision Blizzard and NetEase Faces Expiration
Activision Blizzard, a leading US video game developer, released its financial report for the third quarter of fiscal year 2022 on November 8, acknowledging potential problems with its title publication business in China.
Blizzard said in the report that it has licensing agreements with a third-party entity covering the publication of several titles in China. These agreements, which contributed approximately 3% of the company’s consolidated net revenues in 2021, are set to expire in January 2023. The two sides are in discussions regarding the renewal of these agreements, but a mutually-satisfactory deal may not be reached. It is believed that the third party is Chinese internet technology firm NetEase, which is the designated operator for Blizzard’s games such as World of Warcraft, StarCraft II, Hearthstone Legend, Overwatch and other games in China.
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The co-development and publishing of Diablo Immortal is covered by a separate long-term agreement, so players of this game in China won’t need to worry.
Some reports have pointed out that failure to reach an agreement will deliver a heavy blow to Activision Blizzard, as China is currently one of the largest video game markets in the world, and the firm still believes that the domestic market has great potential.
Activision Blizzard’s layout in China is now more conservative. On August 3 this year, Bloomberg quoted a source as saying that Activision Blizzard and NetEase had terminated their cooperation to develop a World of Warcraft smartphone game, efforts that had persisted over three years. The report said that the two companies had disputes on financial issues, which was then refuted by a spokesperson of Activision Blizzard, who claimed that the two companies were still in a “successful relationship.”
The firm’s latest financial report shows that Activision Blizzard’s net revenue in the third quarter was $1.782 billion, while the figure was $2.07 billion in the same period last year. Net bookings were $1.83 billion, compared with $1.88 billion in the same period last year, down 3% year-on-year, and the impact of exchange rate changes showed a slight increase year-on-year. Its net profit was $435 million, down 32% from $639 million in the same period last year. In addition, Activision Blizzard recorded a total of 368 million monthly active users this quarter.