The 14-year collaboration between NetEase Inc. and Blizzard Entertainment Inc. will come to an end in January. This will cost the Chinese firm a lot in terms of profit and income by suspending services for some of China’s most popular games. This was evident when NetEase’s stocks fell sharply after the news broke out
The Hangzhou-based publishing company and the subsidiary of Activision Blizzard Inc. were unable to agree on an extension of their long-running partnership, which includes popular franchises such as StarCraft, Diablo, Overwatch, and World of Warcraft. On Wednesday, Blizzard announced that it will be suspending most of its online gaming services in mainland China effective from January 23. In the coming days, game sales will also stop.
According to NetEase, the recently released “Diablo Immortal,” which was developed jointly by NetEase and Blizzard, is protected by a different long-term agreement that will allow its service to continue in China.
Unfortunately for the Chinese Internet and gaming giant, Blizzard Entertainment was unable to negotiate terms “compatible with Blizzard’s corporate values and commitments to gamers and staff.”
NetEase said that in 2021 and the first nine months of 2022, Blizzard’s games provided a low-single-digit percentage to its overall net revenue and net profitability.
Earlier, the best way for foreign companies to get into and stay in the Chinese market has been to work with NetEase and Tencent, the two biggest game publishers in China. For instance, Tencent serves as the local distributor for Nintendo’s Switch hardware and software.Even with help from Tencent, Epic Games Inc. gave up on its long-term plan to bring its best-known game, Fortnite, to the market last year after failing to get approval from regulators.
Since Blizzard ended its contract with The9 Ltd. in 2008–2009, NetEase has served as Blizzard’s publishing partner in China, propelling it to the position of second largest gaming firm in China, behind Tencent Holdings. However, it is yet to be seen how investors and stockholders react. As of now, the stocks have fell 11% with more decline expected.
We will keep you updated on the news as we learn more, till then comment down your thoughts on this step taken by NetEase, as gamers throughout China will surely be affected.