In a somewhat surprising turn, Blizzard Activision, the California-based gaming publisher behind global hits like World of Warcraft and Overwatch, will be suspending most of its games in China due to the expiration of licensing agreements with NetEase, the second-largest gaming company in the country.
Blizzard’s announcement is set to end a 14-year licensing partnership between the two gaming giants. All told, Blizzard has been providing gaming services in China through various partners, including Electronic Arts-backed The9, for 20 years.
From January 2023, most of Blizzard’s titles will stop operating in China. That includes the likes of World of Warcraft, Warcraft III: Reforged, Overwatch, the StarCraft series, and Diablo III.
Diablo Immortal co-development and publishing is covered under a separate agreement between the two companies, Blizzard said.
The companies each released their own response explaining the end of the marriage.
”The two parties have not reached a deal to renew the agreements that is consistent with Blizzard’s operating principles and commitments to players and employees, and the agreements are set to expire in January 2023,” said Blizzard.
The decision came at a time when a silver lining appears in China’s gaming industry, which has been hit with heavy handed regulations over the last few years. China’s state media outlet People’s Daily published an op-ed this week titled “the opportunity in the gaming industry cannot be missed,” sending Chinese game stocks surging.
But Blizzard isn’t giving up on China. “We’re immensely grateful for the passion our Chinese community has shown throughout the nearly 20 years we’ve been bringing our games to China through NetEase and other partners,” said Mike Ybarra, president of Blizzard Entertainment.
“Their enthusiasm and creativity inspire us, and we are looking for alternatives to bring our games back to players in the future.”
The termination of the partnership seems to have limited impact on NetEase’s bottom line. The firm said in a statement that “the net revenues and net income contribution from these licensed Blizzard games represented low single digits asa percentage of NetEase’s totalnet revenues and net income in 2021 and in the first nine months of 2022.”
Interestingly, NetEase also had this to say: “We hold high regard in our product and operational standards and abide by our commitments to Chinese players.”
Is NetEase hinting at its dissatisfaction with how Blizzard operates in China? In any case, the divorce doesn’t sound like an amicable one.