In the middle of November, Activision-Blizzard announced it was ending its 14-year licensing agreement with the Chinese gaming firm NetEase. As explained by CNBC, this move will likely result in games like Overwatch and WoW being shut down in China completely.
The two sides originally agreed to work with one another back in August 2008. However, since NetEase and Activision-Blizzard were unable to reach a contract renewal in November, the current deal between the organizations is now expected to end on January 24th. According to NetEase CEO William Ding, NetEase and Activision-Blizzard had “material differences” relating to the “key terms” of the deal.
“We are honored to have had the privilege of serving our gamers over the past 14 years and have shared many precious moments with them during that time,” Ding said. “We will continue our promise to serve our players well until the last minute. We will make sure our players’ data and assets are well protected in all of our games.”
This news was the top trending topic on the hit Chinese social media app Weibo the day it was announced with more than 100 million viewers expressing shock and sadness over the decision. In turn, NetEase’s stock fell by 9% on the same day that this news broke.
The Profit‘s Take:
The only silver lining to this is that we might see fewer gold farmers in WoW. This feels like a total lose-lose situation. The absence of Activision-Blizzard games could lower NetEase’s revenues by 6% to 8% next year according to estimates. You would think NetEase would have been more willing to play ball in the face of an almost 8% decrease in revenues. If Activision-Blizzard is the one acting very greedy here, then we can assume Tencent is their only other potential partner.
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