Players lament the end of Warcraft in China as Blizzard and NetEase part ways

Nov 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 14th 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 was consistent with the California-based firm̵[ads1]7;s “operating principles and commitments to players and employees “.

Blizzard’s announcement, which did not provide further details, was the most popular topic on China’s Weibo platform with more than 100 million views as users expressed shock and sadness. Many said they had been playing the games for more than 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 do I say goodbye?”.

Blizzard said new sales will be suspended in the coming days and players will receive further details.

The games to be discontinued by midnight on January 24 include ‘World of Warcraft’, ‘Hearthstone’, ‘Warcraft III: Reforged’, Overwatch’, the ‘StarCraft’ series, ‘Diablo III’ and ‘Heroes of the Storm’, Blizzard said .

NetEase rose to become China’s second-biggest games company behind Tencent Holdings ( 0700.HK ) largely because of the deals it struck in 2008 to be Blizzard’s publishing partner in China, when Blizzard ended its deal with The9 Ltd ( NCTY.O ).

NetEase later released a statement in Chinese saying it was sorry to see Blizzard’s disclosure, while confirming that the two firms were unable to agree on key terms of cooperation.

In a statement in English, NetEase said terminating the license agreements, which are set to expire on January 23, would not have a “material impact” on its results.

“We will continue our promise to serve our players well until the last minute. We will ensure that players’ data and assets are well protected in all our games,” NetEase CEO William Ding said in a statement.

NetEase said that the recently published ‘Diablo Immortal’, which is developed by NetEase and Blizzard, is covered by a separate long-term agreement that allows the service to continue in China.

It said Blizzard’s games contributed a low single-digit percentage to total net revenue and net income in 2021 and the first nine months of 2022.

In a Nov. 9 research report, Daiwa Capital Markets estimated that the absence of Blizzard games could lower 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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