As NetEase licences expire, Blizzard will stop offering games in China

Chinese Internet companies and Blizzard Entertainment have not come to an agreement to renew licences.

Activision Blizzard announced on Thursday that when its current licencing arrangements with NetEase expire in January, it will cease most Blizzard game services in mainland China.

The Chinese Internet and gaming behemoth was not amenable to a deal that was “compatible with Blizzard’s corporate values and responsibilities to gamers and workers,” according to Blizzard Entertainment.

The Hangzhou-based NetEase company stated in a Chinese statement that it was unable to reach an agreement on important terms of collaboration and added in a second English statement that the licences’ expiration would not have a “significant impact” on its financial results.

In Hong Kong’s morning trade, NetEase’s share price fell by roughly 11%, reversing a sharper decline that had occurred after the announcement.

In large part, because it has been Blizzard’s publishing partner in China since 2008–2009 when the company discontinued its partnership with The9 Ltd., NetEase has grown to be China’s second-largest gaming firm after Tencent Holdings.

Blizzard, a company located in California, announced that new sales would be stopped in the upcoming days and that gamers would get more information.

World of Warcraft, Hearthstone, Warcraft III: Reforged, Overwatch, the StarCraft series, Diablo III, and Heroes of the Storm are among the titles that will be put on hold starting on January 23.

According to NetEase, a second long-term arrangement covers the recently released “Diablo Immortal,” which was co-developed by NetEase and Blizzard, allowing its service to continue in China.

In 2021 and the first nine months of 2022, NetEase claimed that Blizzard’s games made up a low-single-digit portion of its overall net revenue and net profits.

According to a research report published by Daiwa Capital Markets on November 9, the loss of games could reduce NetEase’s income by 6-8% the next year. The computation was based on its estimation that Blizzard accounts for 60–80% of licenced games and that licenced games make up about 10% of NetEase’s total revenue.

Beijing’s efforts to tighten its regulation of the sector, particularly by lowering the number of gaming licences issued and limiting teen playtime, have severely hurt China’s enormous gaming industry, which was once characterised by unrestrained expansion.

The second season of “Overwatch 2,” “World of Warcraft: Dragonflight,” and “Hearthstone: March of the Lich King” will all be released later this year, according to Entertainment.

Blizzard CEO Mike Ybarra stated in the statement, “We are looking for alternatives to bring our games back to players in the future.

The price of NetEase’s Nasdaq-listed shares has almost halved from its peak of $132 in February 2021 to roughly $71.

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