American game developer Blizzard Entertainment said Thursday it would suspend most of its gaming services in mainland China after the end of current licensing deals with Chinese game company NetEase, sending NetEase’s stock plummeting.
Blizzard, which partnered with NetEase in 2008 to offer popular games such as World of Warcraft, Overwatch and Diablo in mainland China, said in a statement that the two companies have not reached an agreement to renew the deals “one that is consistent with the principles operations of Blizzard and commitments to players and employees”.
The partnership will expire next January. Blizzard said new sales will be “suspended for the next few days.”
NetEase shares plunged as much as 15% in Hong Kong following the news.
NetEase said the expiration of its licenses with Blizzard would have “no material impact” on the company’s financial results.
The company said revenue and revenue from licensed Blizzard games represents “low single digits” as a percentage of NetEase’s total revenue and revenue last year and in the first three quarters of 2022.
“We have made a great effort and sincerely tried to negotiate with Activision Blizzard so that we can continue our cooperation and serve the many dedicated gamers in China,” said William Ding, CEO of NetEase, in a statement. “However, there were substantial differences on key terms and we were unable to reach agreement.”
Blizzard Entertainment CEO Mike Ybarra said the company is looking for alternatives to bring gaming back to Chinese gamers in the future.
“We are immensely grateful for the passion our Chinese community has shown during the nearly 20 years that we have brought our games to China through NetEase and other partners,” said Ybarra.
The games affected by the suspension are World of Warcraft, the StarCraft series, Hearthstone, Heroes of the Storm, Overwatch and Diablo III.
China’s gaming industry came under scrutiny in August last year, with authorities limiting play time for minors to just three hours a week after state media denounced online gaming as “opium spiritual”. regulators.
Game companies like NetEase and Tencent have seen their share prices plummet amid economic scrutiny and uncertainty as China continues its COVID-19 measures, including sudden lockdowns, mass testing and tight entry restrictions.
But there are signs that China is easing restrictions on the tech and gaming industries. On Thursday, NetEase received its second gaming license after cracking down on a game titled “Journey to the West: Return.” It received its first license in September for a mobile game, ‘All-Star Street Ball Party’.
NetEase’s rival and the world’s largest game company by revenue, Tencent, has also received a license for its action game ‘Metal Slug: Awakening’, its first commercial game license since the crackdown began. In September, Tencent was granted a license for a non-monetizable educational game.
A total of 70 games were approved in a list released Thursday by the National Press and Publication Administration.
This story was originally published November 17, 2022 03:22.