Blizzard Entertainment, a division of Activision Blizzard, announced that due to the expiration of its licensing agreement with NetEase it will suspend China services of most Blizzard games on January 23, 2023. The licensing agreement has been in place since 2008 but the two companies could not come to an agreement. In its own announcement, NetEase stated the expiration of the licenses would have “no material impact on NetEase’s financial results.
In China foreign publishers need a China-based domestic partner. The two main options have been NetEase and Tencent. The two big licenses NetEase has are Blizzard games and Minecraft from Microsoft. The Minecraft license is until August 2023.
In its financial filings for its latest fiscal year ending 12/31/21, NetEase stated that licensed games account for 9.5% of total revenue and 13% of game revenue. That does not seem like a non-material amount. However, it also does not seem to be fatal to NetEase’s business.
DFC estimates the overall license deal brings in around $2 billion a year so it seems both companies should be motivated to work out terms. Of course, as the primary developer, Activision Blizzard has the upper hand. It is also interesting to note that Microsoft, NetEase’s other major licensing partner is looking to buy Activision Blizzard.