Renewal of Deal Between Blizzard and NetEase Breaks Down

Two months after the announcement of a game license termination between NetEase and Blizzard, both parties confirmed that negotiations had failed and they would not renew their contracts. On January 17, Blizzard China announced that it would suspend game services in China on January 23 in accordance with the announcement of Wangzhiyi, a subsidiary of NetEase that is used to contact Blizzard and operate its games in mainland China.

According to Yicai’s report, reliable sources close to Blizzard pointed out that Blizzard and NetEase initiated final negotiations and communication last week to discuss the agreement based on established terms agreed upon by NetEase in 2019, and the cooperation was postponed for six months. This proposal is aimed at avoiding interruptions to the operation of games in China, while Blizzard seeks more time to find future partners.

Last week’s communication was initiated by Mike Ybarra, president of Blizzard, and NetEase executives did not accept the proposal to postpone the existing game service agreement. Blizzard has raised objections to the layoffs of Wangzhiyi, because they may affect the subsequent work handover, but it has not been adopted.

On November 17 last year, Blizzard and NetEase successively issued statements saying that they would terminate their cooperation after the agreement expired. Since the agreement was reached in 2008, they have cooperated for 14 years. Games such as World of Warcraft and Hearthstone have accumulated a group of loyal players in China. Therefore, the move caused an uproar among the industry and players.

As for the reasons behind the cooperation breaking down, both sides have different rhetoric. A source close to Blizzard recently told Yicai that the reason was that NetEase wants to fundamentally change the cooperation form and structure between the two parties, which will make Blizzard lose control of the game IP, which Blizzard cannot accept.

Previous media reports indicated that Blizzard had put forward harsh requirements. For example, Blizzard’s share of revenue and net profit needs to be further increased and Blizzard’s game pricing would adopt a global synchronization strategy, while the previous service pricing in China was about 20% lower than that in other parts of the world. Regarding the matter, people close to Blizzard China revealed that these statements are not accurate.

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As for rumors circulating that Blizzard wants to control the data of millions of players all over China, people close to Blizzard China said that the firm had no relevant intentions. NetEase has not made a public statement on matters related to player data.

Tencent, ByteDance, Bilibili, Perfect World, moHoYo, The9 Ltd., and other enterprises in China are all considered potential partners of Blizzard, but none of them have confirmed it. Many Blizzard game teams have noted that they are still discussing with potential partners within the country.