NetEase Declines Tie-Up Extension Offer: Activision Blizzard

The long-time partnership of US video game maker Activision Blizzard Inc. with NetEase Inc. is set to end as the Chinese gaming giant on Tuesday declined an offer to prolong their China licensing agreement for six more months.

A post on a Chinese microblogging platform stated that Blizzard China contacted the Hangzhou-based firm the previous week with a proposal to extend their partnership, which NetEase had turned down.

The potential extension, under the current terms, was included in the two parties’ latest deal in 2019, according to Blizzard.

The end of the 14-year partnership between Activision Blizzard and NetEase sets the stage for the exit of international titles such as ‘World of Warcraft’ from the top video gaming market, China. The online multiplayer game is significantly popular in the country.

Blizzard China’s game services are due to end on January 23. NetEase has yet to comment on the matter.

Ending of a 14-Year Lucrative Partnership

The announcement came after Activision Blizzard in November said it was ending its partnership with NetEase, surprising the industry as their agreement was seen as one of the most profitable and enduring US-China business partnerships in the video game space.

In the same month, NetEase could not accept the proposed terms of the Santa Monica, California-based publisher, citing ‘material differences on key terms’ in deal talks as the reason.

Activision Blizzard severing ties with NetEase leaves the US video game company without a Chinese publisher. In December, Activision Blizzard said it was engaged in discussions with prospective partners.

Blizzard continues to talk to alternative distribution partners to avoid completely withdrawing its services in China.

The deal has helped NetEase become the country’s second-largest games distributor and provided Activision Blizzard’s subsidiary a Chinese partner for hit titles such as Diablo, Warcraft, and Overwatch.

The Chinese internet group has also seen its own game development capabilities gain momentum, with its games now representing more than 60% of revenue.