Activision Blizzard and Chinese gaming firm NetEase are ending their 14-year licensing agreement, a move that will result in hit game franchises like World of Warcraft and Overwatch shutting down in China.
The 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. World of Warcraft, a massively multiplayer online game, is hugely popular in China.
NetEase’s Hong Kong-listed shares plunged 9% Thursday.
In a statement, NetEase CEO William Ding said Blizzard and NetEase had “material differences on key terms” in deal negotiations.
“We are honored to have had the privilege of serving our gamers over the past 14 years and have shared many precious moments with them during that time,” Ding said.
“We will continue our promise to serve our players well until the last minute. We will make sure our players’ data and assets are well protected in all of our games.”
It means Chinese gamers will no longer be able to play titles from blockbuster franchises such as World of Warcraft, StarCraft, Hearthstone, Overwatch and Diablo, which U.S. tech giant Microsoft is set to acquire in a $69 billion deal to buy Activision Blizzard.
New Blizzard game sales will be suspended in mainland China “in the coming days,” Blizzard said. Upcoming releases for World of Warcraft: Dragonflight, Hearthstone: March of the Lich King and season 2 of Overwatch 2 will proceed as normal later this year, it added.
“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 Blizzard President Mike Ybarra.
“Their enthusiasm and creativity inspire us, and we are looking for alternatives to bring our games back to players in the future.”
NetEase said net revenues and net income contribution from the licensed Blizzard games “represented low single digits” as a portion of its overall sales and profits in 2021 as well as the first nine months of this year.
The ending of the arrangement “will have no material impact on NetEase’s financial results,” the company added.
The publishing of the hotly anticipated mobile and PC game Diablo Immortal in China will not be affected as it is covered by a separate agreement between the firms.
The game’s release had been delayed beyond June 23 after issues with network and performance optimizations.
Thursday’s move comes at a sensitive time for the Chinese games industry which is only just emerging from a months-long freeze of approvals from regulators. The industry has faced intense scrutiny as part of a broader regulatory tightening on China’s domestic technology companies.
— CNBC’s Arjun Kharpal contributed to this report.