ActiBlizz not renewing their contract with NetEase (the pulisher that gets their games to China), suspending operations there

Blizzard destroyed their reputation to sell games in China and now China won't let them sell their games bau businesswire HOME SERVICES NEWS EDUCATION ABOUT US A BERKSHIRE HATHAWAY COMPANY Blizzard Entertainment and NetEase Suspending Game Services in China Certain games will no longer be available at end of license with NetEase on January 23, 2023 November 16, 2022 09:00 PM Eastern Standard Time Search IRVINE, Calif.--(BUSINESS WIRE)--Blizzard Entertainment, Inc. announced today that it will be suspending most Blizzard game services in mainland China due to the expiration of the current licensing agreements with NetEase, Inc. on January 23, 2023. This includes World of Warcraft®, Hearthstone®, Warcraft III: Reforged, Overwatch®, the StarCraft® series, Diablo III, and Heroes of the StormⓇ. Diablo Immortal co-development and publishing is covered under a separate agreement between the two companies. "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" Tweet this About Blizzard Entertainment, Inc. Blizzard Entertainment has had licensing agreements with NetEase since 2008, covering the publication of these Blizzard titles in China. 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. We will suspend new sales in the coming days and Chinese players will be receiving details of how this will work soon. Upcoming releases for World of Warcraft: Dragonflight, Hearthstone: March of the Lich King, and season 2 of Overwatch 2 will proceed later this year. "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, Blizzard Entertainment. "Their enthusiasm and creativity inspire us, and we are looking for alternatives to bring our games back to players in the future." Best known for iconic video game universes including WarcraftⓇ, Overwatch, Diablo, and StarCraft®, Blizzard Entertainment, Inc. (www.blizzard.com), a division of Activision Blizzard (NASDAQ: ATVI), is a premier developer and publisher of entertainment experiences. Blizzard Entertainment has created some of the industry's most critically acclaimed and genre-defining games over the last 30 years, with a track record that includes multiple Game of the Year awards. Blizzard Entertainment engages tens of millions of players around the world with titles available on PC via Battle.net®, Xbox, PlayStation, Nintendo Switch, iOS, and Android. Cautionary Note Regarding Forward-looking Statements: The statements contained herein that are not historical facts are forward- looking statements including, but not limited to statements of our plans and objectives, including those related to releases of products or services. Activision Blizzard, Inc. generally uses words such as "outlook," "forecast," "will," "could," "should," "would," "to be," "plan," "aims," "believes," "may," "might," "expects," "intends," "seeks," "anticipates," "estimate," "future," "positioned," "potential," "project," "remain," "scheduled," "set to," "subject to," "upcoming," and the negative version of these words and other similar words and expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risks, reflect management's current expectations, estimates, and projections about our business, and are inherently uncertain and difficult to predict.

blizzard blizzard entertainment netease china videogames businesswire suspension

Origin Entry: Blizzard Entertainment

Notes:

Key notes:
• The Blizzard-NetEase deal, which was first struck back in August 2008, will now expire in January 2023 after the two firms were unable to agree on renewal terms.

• NetEase’s Hong Kong-listed shares plunged by to 15% as of posting

• Chinese players dug around and claim these are Blizzards demands that NetEase disagreed with:
> Blizzard's share of revenue and net profit had increased by more than 50%, and compared to 2019-2022, NetEase's share was only in the single-digits. At least, according to them.
> Chinese services were priced about 20% lower than the rest of the world. Blizzard wanted their game pricing to adopt a global synchronous strategy, so they wanted to get rid of this.
> Blizzard also asked NetEase to pay a large prepaid agreement/deposit to guarantee the completion of "Article 2" of their contract (might dig around to find the document online). Failure to complete this transaction meant NetEase would be "penalized".

• Going back to NetEase's statements: Compared to other businesses that NetEase works with, Blizzard only contributes around 3% of NetEase's annual revenue
> This is also after much of NetEase's investment into e-sports teams like Shanghai Dragons

• And to toss shade at NetEase since no corporation is 100% innocent:
> There were reports elsewhere of them asking for bigger cuts from other business partners, trying to compensate for losses with international partners since their domestically-made games don't sell
> It's debated whether Xinnie's government shenanigans are playing a role in this, because other foreign gaming companies are doing business in China as usual. Other issues include NetEase having a tussle with the CCP and tensions rising between US and China

• Though services will be suspended, Chinese gaming communities that want to play will simply cross over into other servers; the only thing they really lose are localization changes.

• And while ActiBlizz won't be selling games in China despite bending over backwards to profit there, this isn't going to be the end for their ventures into Poohland. Many assume they're window shopping for another publisher as of writing, not that I can cite anything.

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