By Sagar V. Mankar Will Blizzard’s Games Make a Triumphant Comeback in China as Before?
After a year-long dispute, iconic game developer Blizzard Entertainment and Chinese gaming giant NetEase have finally reached a new deal to bring back beloved franchises like World of Warcraft, Hearthstone, and Overwatch to the Chinese market.
This development is sure to delight millions of dedicated players in the world’s largest gaming community.
What Led to the Blizzard-NetEase Split in First Place?
The partnership between Blizzard and NetEase dates back to 2008, with the Chinese company handling the publishing duties for Blizzard’s biggest games.
However, in January 2023, the two parties failed to agree on the terms for a renewal, leading to the suspension of several Blizzard titles in China.
This resulted in several of Blizzard’s most popular titles being suspended in China, including:
- World of Warcraft
- Overwatch
- Diablo III
- Hearthstone
- Heroes of the Storm
- StarCraft (all titles)
- Warcraft 3: Reforged
The companies remained tight-lipped on the specifics, but reports indicated disagreements over financial terms and operating principles were to blame.
According to Blizzard’s statement at the time, the two companies could not reach a deal “consistent with Blizzard’s operating principles and commitments to players and employees.”
However, Diablo Immortal was not included in this deal as it was co-developed by both parties and remained available even after the split.
Huge Impact on Both Sides
Whatever the reason, the fallout was massive.
Estimates (a Daiwa Capital Markets report) suggested NetEase could lose 6-8% of revenue without Blizzard’s games as licensed games account for around 10% of the company’s total revenue, with Blizzard’s titles making up as much as 80% of that. Their stock plunged 11% on the news.
For Blizzard to search for new publishers in China immediately was also a hard task.
To legally operate in China, foreign game publishers must partner with a licensed Chinese company.
However, China has made this process extremely difficult in recent years.
A government crackdown and restructuring greatly slowed licensing approvals, creating a huge backlog.
According to analyst Daniel Camilo, securing a new publishing license can now take months.
While many Chinese gamers continued to access non-domestic titles through other means, such as the international version of Steam.
This could be one reason why Blizzard Entertainment decided to bring their games to PC via Steam.
They started with the release of Overwatch 2 in August last year and plan to release Diablo 4 on October 17th this year.
But sadly other Blizzard titles are not available on Steam.
The Return of Blizzard’s Iconic Titles: New Deal Signed
After months of negotiations, Blizzard and NetEase have finally reached an agreement to once again serve players in mainland China.
In a joint statement, the companies announced that they plan to “sequentially relaunch” Blizzard titles in China, starting with “World of Warcraft” this summer.
According to Niko Partners, “World of Warcraft” is a hugely popular multiplayer title in China as it was the seventh highest-grossing PC game and the ninth most played PC game in China during 2021.
Our legendary worlds are for all to share & that includes our passionate Chinese community.
We are pleased to announce a new agreement with NetEase to bring Blizzard games back to mainland China. Thank you for your patience & support.
🔗 https://t.co/zE5XkmE84K pic.twitter.com/W4kxz1XcPF
— Blizzard Entertainment (@Blizzard_Ent) April 10, 2024
Exploring New Opportunities: NetEase on Xbox Consoles
In addition to the game publishing partnership, the two companies have agreed to explore bringing new titles from NetEase to Xbox consoles, further strengthening their partnership.
Phil Spencer, CEO of Microsoft Gaming, expressed excitement about the deal, stating,
“Returning Blizzard’s legendary games to players in China while exploring ways to bring more new titles to Xbox demonstrates our commitment to bringing more games to more players around the world.”
China’s Gaming Crackdown
It’s worth noting that the gaming industry in China has faced increased scrutiny and regulation in recent years.
In 2021, China implemented strict measures to combat gaming addiction among minors, limiting their playtime on weekdays and weekends.
These regulations are part of Beijing’s broader crackdown on what it perceives as overly powerful companies, particularly in the tech sector.
The government body responsible for issuing publishing licenses has also been slow to process applications, further complicating the process for foreign publishers.