U.S. games developer Blizzard Entertainment and China’s NetEase said that licenses covering the Chinese distribution of games titles including “World of Warcraft,” the “StarCraft” series, “Hearthstone,” “Heroes of the Storm,” “Overwatch” and “Diablo III” would expire in January 2023 and not be renewed. Netease has distributed the titles since 2008.
Blizzard said that the two could not reach a deal “that is consistent with Blizzard’s operating principles and commitments to players and employees.” It said that it would look for another deal that brings bthe titles back to China.
In its own statement NetEase said: “We have put in a great deal of effort and tried with our utmost sincerity to negotiate with Activision Blizzard so that we could continue our collaboration and serve the many dedicated players in China. However, there were material differences on key terms and we could not reach an agreement.”
Neither party elaborated on their differences. Chinese and U.S. companies have recently encountered difficulties over the compatibility of the two countries national security laws and regulations over where user data may be stored.
“We will make sure our players’ data and assets are well protected in all of our games,” said William Ding, CEO of NetEase.
Additionally, mainland Chinese have intervened heavily in the games industry over the past two year. They have delayed the granting of licenses that allow games to be commercialized and have introduced strict age and ID requirements and gameplay limits in order to protect minors.
NetEase also specified that the co-development and publishing of “Diablo Immortal” is covered by a separate long-term agreement and will continue.
NetEase’s dual listed shares tumbled by 9% in Hong Kong on Thursday following the news announcement, closing at HK$103.50. The company, however, said that the failed deal would “have no material impact on its results.
“The net revenues and net income contribution from these licensed Blizzard games represented low single digits as a percentage of NetEase’s total net revenues and net income in 2021 and in the first nine months of 2022. The expiration of such licenses,” it said in a statement.
Hours later, NetEase published its quarterly figures to end of September. These showed July to September revenues of RMB24.4 billion ($3.4 billion), an increase of 10% compared with the third quarter of 2021. Quarterly net profits doubled to RMB6.62 billion ($931 million).
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