Chinese gaming giant NetEase is renewing its games distribution partnership with Microsoft’s Blizzard Entertainment more than a year after the companies had a fallout that caused NetEase shares to plunge at the time.
Starting from this summer, Chinese players will once again be able to access popular Blizzard titles including Hearthstone and World of Warcraft through NetEase, the companies jointly announced on Wednesday. They will work together to bring NetEase games to Microsoft’s Xbox console as well as other platforms, according to the announcement.
“Celebrating our collaborations, we are thrilled to embark on the next chapter, built on trust and mutual respect, to serve our users in this unique community that we’ve built together,” NetEase Chief Executive William Ding said in the announcement.
Led by Ding, who is China’s fifth richest billionaire with a net worth of $32 billion, NetEase pulled the plug on its the long-time collaboration with its American business partner in November 2022. At the time, Ding announced there were “material differences” over key terms without providing further details. Blizzard said it couldn’t renew the licensing partnership — which started in 2008 — in a way that was consistent with its operating principles. Shares in Hong Kong-listed NetEase plummeted as much as 15% after that news broke.
The pair has been widely reported to disagree over terms ranging from data storage to ownership of intellectual property. Wednesday’s announcement didn’t disclose details of the new partnership, but analysts say Blizzard Entertainment, a division of Activision Blizzard, obviously still wants a piece of China’s mobile gaming market.
Despite recent regulatory headwinds, China is still the world’s largest market for mobile games with $37 billion in sales generated last year, according to estimates from advisory and research firm Omdia. The U.S., the second largest, generated $22 billion in mobile games sales, according to Omdia.
Cui Chenyu, a Shanghai-based analyst at the firm, says more collaborations are likely down the road. NetEase might release Overwatch2, the sequel to Blizzard’s popular shooter game Overwatch, in China. She adds that management changes at Blizzard, where longtime CEO Bobby Kotick stepped down in December 2023 after 32 years at the helm, might have played a role. The gaming studio was fully taken over by Microsoft in a $69 billion deal that closed two months earlier in October 2023.
“Blizzard Entertainment doesn’t want to give up China,” Cui says, adding that the company hasn’t made much progress in finding a new partner to distribute its games in the country over the past year.
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