Blizzard to halt its games in China due to licensing

Following its failure to renew its 14-year licensing arrangement with local company NetEase, Activision Blizzard has stated that it... Shubh | 18. November 2022

Following its failure to renew its 14-year licensing arrangement with local company NetEase, Activision Blizzard has stated that it will shortly cease Blizzard Entertainment’s services in China.

Due to the expiration of licensing agreements with Chinese gaming business NetEase, Blizzard Activision, the California-based game publisher behind international bestsellers like World of Warcraft and Overwatch, will stop the majority of its games in China. For the past 14 years, NetEase and Blizzard have collaborated on some of the most well-known mobile and PC games in Chinese markets. However, despite extensive negotiations, the two businesses were unable to come to agreements in several areas, bringing an end to their decade-long partnership. 

Blizzard’s services in China will be halted in January

Online services for several of Blizzard’s popular titles, including World of Warcraft, Hearthstone, Warcraft 3: Reforged, Overwatch, the StarCraft series, Diablo 3, and Heroes of the Storm, will terminate with the conclusion of the agreement. Diablo Immortal, however, won’t be impacted because it is governed by a different deal between the two businesses. Contracts between Activision and other parties governing Call of Duty: Mobile in China are untouched as well. 

The most recent statement from NetEase states that certain Blizzard-developed games would no longer be available as of January 24, 2023. The operation of games and servers will be formally shut down at midnight on January 23, 2023, and the virtual top-up service and new player registration will be discontinued from November 23, 2022.

Is this the dead end of the commercial relationship between Netease and Blizzard?

Although both companies haven’t given much insight into the reasons behind the decision, a source close to NetEase shed some light on the matter. The source claims that Blizzard mandated global pricing synchronization for its games, despite the fact that China’s prices had previously been 20% lower than those of the rest of the globe. Blizzard also urged NetEase to create additional mobile games, though, NetEase will only receive a portion of the game’s sales in China.

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Image Credit: NetEase

Furthermore, the Chinese government has also tightened down on the gaming sector in recent years, warning parents that their children are spending too much on games. The government also imposed new age and play time limitations on users. NetEase grew from a small developer to become the second-largest gaming company in China behind Tencent Holdings with its publishing partnership with Blizzard. The future running of the company, however, is likely to be impacted now that the agreement is about to expire.

According to reports, only a small portion of NetEase’s total net revenue and net profitability in 2021 and the first nine months of 2022 came from Blizzard’s games. Earlier this month, Daiwa Capital Markets predicted that the loss of Blizzard games might reduce NetEase’s income by 6-8% the following year. Blizzard, on the other hand, expressed gratitude for the enthusiasm of fans in the Chinese region and promised to come up with strategies to bring its games back to Chinese players in the future.

Header: Blizzard Entertainment