Gamers lament the end of Warcraft in China as part of the Blizzard and NetEase way

Nov. 17 (Reuters) – Blizzard Entertainment (ATVI.O) and NetEase (9999.HK) He upset thousands of gamers Thursday by saying shows like “World of Warcraft” will not be available in China starting next year as a 14-year partnership ends.

Shares of NetEase closed down 9% in Hong Kong after Blizzard said it was unable to reach an agreement with the Hangzhou-based company that aligns with the California-based company’s “Operating Principles and Obligations to Players and Employees”.

Blizzard’s announcement, which did not provide further details, was the top trending topic on Chinese platform Weibo with over 100 million views as users expressed their shock and grief. Many said they had played her games for over a decade.

“My youth was marked by playing Hearthstone,” said one, while another lamented: “I am so sad. I’ve been playing Blizzard games since 2008… How do I 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,” Blizzard said.

NetEase has risen to become the second largest game company in China after Tencent Holdings (0700.HK) Much of it was due to 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 issued a statement in Chinese saying it was sorry to see Blizzard’s disclosure, while stressing that the two companies were unable to agree on major terms of cooperation.

In an English-language statement, NetEase said the termination of the licensing agreements, which are set to expire on January 23, will not have a “material impact” on its results.

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

NetEase said its recently published “Diablo Immortal,” which was jointly developed by NetEase and Blizzard, is covered under a separate long-term agreement, allowing its service to continue in China.

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

In a research report released on November 9, 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 about 10% of NetEase’s total revenue and that Blizzard accounts for 60-80% of licensed games.

Additional reporting by Bharat Govind Gautam in Bengaluru; Edited by: Rashmi Aish, Savio D’Souza, Sherry Jacob-Phillips and Alexander Smith

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