Tech

Activision Blizzard suspends China game service after NetEase license ends in January


Activision Blizzard said on Thursday that it will suspend most of Blizzard’s game services in mainland China after its current licensing agreements with NetEase end in January.

blizzard entertainment said it was unable to reach an agreement with the Chinese internet and gaming giant “in line with Blizzard’s operating principles and commitment to players and employees.”

based in Hangzhou NetEase said in a Chinese statement that it could not agree on key terms of cooperation and added, in a second statement in English, that the license expiration would not have “significant impact”. to their financial results.

NetEase’s share price fell about 11% in morning trading in Hong Kong, down slightly from the steeper drop following the announcement.

NetEase has become China’s second-largest game company after Tencent in large part thanks to its position as Blizzard’s publishing partner in China since 2008-2009 when Blizzard terminated its agreement with The9.

California-based Blizzard said new sales will be suspended in the coming days and players will receive more details.

Games suspended from January 23 include World of Warcraft, heater, Warcraft III: Forged Again, guardStarCraft series, Diablo IIIand Heroes of the Storm.

According to NetEase, recently announced Diablo Immortalco-developed by NetEase and Blizzard, secured by a separate long-term agreement, allowing its service to continue in China.

NetEase says Blizzard’s games contributed a low single-digit percentage to their total net sales and net income for 2021 and the first nine months of 2022.

Daiwa Capital Markets wrote in a research report on November 9 that the absence of Blizzard games could reduce NetEase’s revenue by 6-8% next year. The calculation is based on an estimate that licensed games account for about 10% of NetEase and Blizzard’s total revenue. accounts for 60-80 percent of licensed games.

China’s massive gaming industry, once marked by unbridled growth, has been badly damaged by Beijing’s efforts to tighten oversight of the sector, including reducing number of game licenses issued and playtime restrictions for teenagers.

Blizzard Entertainment says the upcoming releases for World of Warcraft: Dragonflight, Hearthstone: March of the Lich King, and Overwatch 2 season 2 will be underway later this year.

“We’re looking for alternatives to bring our games back to players in the future,” Blizzard President Mike Ybarra said in a statement.

NetEase’s Nasdaq-listed shares have nearly halved to around $71 (roughly Rs 5,800) from a February 2021 high of $132 (roughly Rs 10,800).

© Thomson Reuters 2022


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