Blizzard Entertainment and Chinese gaming firm NetEase are ending their 14-year licensing agreement, meaning that hit game franchises like World of Warcraft and Overwatch will no long be playable in China.
The deal, which were signed by Blizzard and NetEase in August 2008, will expire in January 2023 because the two firms were unable to reach agreement on renewal terms.
“We had material differences on key terms,” NetEase CEO William Ding said in a statement.
As a result, Blizzard’s titles, including World of Warcraft, Diablo III, the StarCraft series, Hearthstone, Overwatch, will stop operating in China after January, 2023.
Both companies noted that Diablo Immortal co-development and publishing is covered under a separate long-term agreement, which means the game will likely continue its service in China.
The termination of the partnership will have a little impact on NetEase’s bottom line as the Chinese gaming firm noted that “the net revenues and net income contribution from these licensed Blizzard games represented a small fraction of NetEase’s total net revenues and net income.
Still, NetEase’s shares dipped more than 10% in trading on Hong Kong Stock Exchange on Thursday following the announcement.
Originally signed in 2008 and last renewed in 2019, the partnership was a win-win agreement for both companies, offering NetEase with globally recognised brand recognition and hits, Blizzard got access into the world’s biggest PC and mobile gaming market.
Blizzard amassed more than 400 million fans in China where contributed at least 3 per cent of its net revenue and over $400 million in esports revenue in 2021.
Signs of a discrepancy between the two companies emerged in the summer when they scrapped plans for a World of Warcraft smartphone game that had been in development for three years. NetEase shed a team of more than 100 developers tasked with creating content for the title.
Activision will be unable to continue its China business without finding an alternative partner. It still remain unknown that Blizzard has engaged in negotiations with other Chinese leading game companies such as Tencent Holdings or other local distributer.