NetEase Rejected Game License Extension Offer, Blizzard Says

NetEase Inc. turned down an offer from US games publisher Blizzard to extend their China licensing agreement by six months, setting the stage for the withdrawal of global titles like World of Warcraft from the top gaming market.

The potential extension, under the existing terms, was an option included in the two companies’ most recent deal in 2019, Blizzard said in a statement Tuesday. NetEase declined to take it up, according to the US firm, and absent an alternative provider to take over from NetEase, Blizzard’s content and online services will be withdrawn from China on Jan. 23, the final date of its existing agreement.

Blizzard and NetEase broke off talks late last year on a new licensing agreement that would have prolonged their 14-year partnership of delivering Blizzard titles to the Chinese market. The mutually beneficial relationship has helped build NetEase into China’s second-biggest games distributor, after Tencent Holdings Ltd., and gave the Activision Blizzard Inc. unit a reliable partner for franchises like Diablo, Warcraft and Overwatch.

A NetEase spokesperson declined to comment, referring to the company’s previous statement about terminating the partnership. Its shares had plummeted after the initial November announcement, but recovered after the Hangzhou firm said Blizzard games only contributed a low-single-digit percentage of its revenue and profit.

“We have put in a great deal of effort and tried with our utmost sincerity to negotiate with Activision Blizzard so that we could continue our collaboration and serve the many dedicated players in China,” NetEase founder and chief executive officer William Ding said at the time.

Sentiment on China’s Weibo social service has been largely critical of Blizzard, with users pointing to the company’s efforts at an extension as a means to bridge the gap while it negotiates a better deal with a competitor.

World of Warcraft players in China will have the option to store their progress via a new service to be provided by Blizzard, the company said. Blizzard continues to be engaged in discussions with alternative distribution partners to help avoid the cutoff of its services in China, it added.