Diablo, Starcraft, World of Warcraft, Hearthstone or Overwatch… Almost all of the famous licenses produced by the American studio Blizzard, a subsidiary of Activision Blizzard, were to become inaccessible in China, on the night of Monday January 23 to Tuesday January 24, at midnight. Its publishing agreement with the Chinese NetEase, which has been distributing its games in the country since 2008, has indeed ended. Blizzard is thus deprived of access to the world’s largest video game market, which represented 36.7 billion euros in 2022 (269 billion yuan), where foreign companies must enter into an agreement with a Chinese publisher to market their productions.
This suspension, formalized by NetEase in “a farewell letter” released on January 23, however, comes as no surprise. In November 2022, a press release from the creators of World of Warcraft already announced that they had failed to renew their partnership with the publisher based in Hangzhou, without specifying what were the sticking points. According to testimonies collected by the news agencies Bloomberg and Reuters, the estrangement relates not only to the amount of the agreements but also to the intellectual property of the securities – a point that NetEase denies.
Three months later, negotiations were still deadlocked. “Unfortunately, NetEase has refused to extend the game release for another six months while we find a new partner so everyone can keep playing”regretted the Californian company in a press release published on the Weibo social network on January 17.
The withdrawal of Blizzard’s iconic video games from China has become inevitable and is also causing significant discontent online, the Hong Kong daily points out. South China Morning Post. To try not to amplify it, Blizzard announced in December that users could make a full backup of their progress, characters or items collected, while a new contract is established with another company.
The rise of the Chinese market
The day after this declaration, NetEase was very critical of its former partner, in a press release published on the social network WeChat. The publisher terminated a contract “unequal and unfair”invoking “a lack of consideration” from the Americans “for gamers and NetEase”. The same day, a statue bearing the image of a weapon of World of Warcraft was dismantled from the garden of NetEase headquarters, reported on-site observers. Refunds for Blizzard products after the service has been suspended have been announced.
These public disapprovals, rare in the sector, show that the balance of power has changed between the two former partners. When their agreement was sealed in 2008, NetEase was dependent on Blizzard franchises, which represented more than 98% of its turnover. Propelled by this partnership as a major player in the Chinese market, the modest company has become the second largest publisher in the country, behind Tencent. It claimed 13.7 billion dollars (12.7 billion euros) in turnover in 2021, more than Activision Blizzard (8.1 billion dollars, or 7.5 billion euros), yet leader in the United States. This sector giant now has the means to buy other studios, for example the French Quantic Dream last August, and its catalog is very extensive. The exploitation of Blizzard’s licenses only covered 9% of its turnover in 2021: losing them is therefore not likely to be fatal to it.
However, the break is not complete. NetEase and Blizzard will continue to work together for a single game: Diablo Immortal, released in 2022 on PC and mobile. Unlike the previously mentioned titles, this one was co-developed by the two entities and thus benefits from a separate publishing contract.
Still, the stiffening of relations between NetEase and Activision Blizzard could portend other suspensions in the future. The publishing contract Minecraft Microsoft, also tied with NetEase, ends in August. The firm specializing in Asian markets Niko Partners fears that the same scenario will happen again, especially since in January 2022 Microsoft embarked… on the acquisition of Activision Blizzard.
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