November 17 (Reuters) – Blizzard Entertainment (ATVI.O) and NetEase (9999.HK) caused consternation among thousands of gamers on Thursday by saying hits such as ‘World of Warcraft’ will not be available in China from next year as a 14-year partnership ended.
NetEase shares closed 9% lower in Hong Kong after Blizzard said it was unable to reach an agreement with the Hangzhou-based company that complies with “operating principles and commitments to players and employees” of the California-based company.
Blizzard’s announcement, which gave no further details, was the top trending topic on China’s Weibo platform with over 100 million views as users expressed shock and sadness. Many said they had played his games for over a decade.
“My youth was heavily influenced by playing Hearthstone,” said one, while another lamented, “I’m so sad. I started playing Blizzard games from 2008. .. how to say goodbye?
Blizzard said new sales will be suspended in the coming days and players will receive more details.
Games that will be suspended by midnight on January 24 include ‘World of Warcraft’, ‘Hearthstone’, ‘Warcraft III: Reforged’, Overwatch, the ‘StarCraft’ series, ‘Diablo III’ and ‘Heroes of the Storm’ , says Blizzard.
NetEase has become the second largest game company in China behind Tencent Holdings (0700.HK) largely due to deals it made in 2008 to be Blizzard’s publishing partner in China, when Blizzard ended its deal with The9 Ltd (NCTY.O).
NetEase later issued a statement in Chinese saying it was sorry to see Blizzard’s disclosure, while confirming that the two companies were unable to agree on key terms of cooperation.
In an English statement, NetEase said the end of the licensing agreements, which are due to expire on January 23, would have no “material impact” on its results.
“We will pursue our promise to serve our players well until the last minute. We will ensure that our players’ data and assets are well protected in all of our games,” NetEase CEO William Ding said in a statement. a statement.
NetEase said the recently released “Diablo Immortal,” co-developed by NetEase and Blizzard, is covered by a separate long-term agreement, allowing its service to continue in China.
He said Blizzard’s games contributed a low single-digit percentage to its total net income and net income in 2021 and the first nine months of 2022.
In a November 9 research report, Daiwa Capital Markets estimated that the absence of Blizzard games could reduce NetEase’s revenue by 6-8% next year.
This was based on an estimate that licensed games account for around 10% of NetEase’s total revenue and Blizzard accounts for 60-80% of licensed games.
Reporting by Bharat Govind Gautam in Bengaluru; Editing by Rashmi Aich, Savio D’Souza, Sherry Jacob-Phillips and Alexander Smith
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