For 14 years, Blizzard and NetEase worked together to release games like Diablo, World of Warcraft or Overwatch in China. In January 2023, the partnership came to an abrupt end, which was said to have generated $750 million in annual revenue. Now the New York Times reports on the background.
This is what we knew so far:
- To do business in China, Western companies need a local partner. For Activision Blizzard, that was NetEase for 14 years: They published Blizzard’s games in China such as WoW, Diablo 3, or Overwatch. The deal was said to generate around $750 million in revenue per year.
- However, a rift occurred between the two companies in 2023, and the agreement fell apart. NetEase blamed Blizzard and reacted angrily and furiously. Blizzard remained tight-lipped about why the deal ended.
- In any case, all servers for Blizzard’s games went offline in January. A total of 3 million players were reportedly affected by the end of the games, with about 100,000 players alone in WoW losing their home. The Overwatch League, which has its own Chinese teams, seems to have been strongly affected by the end of the deal.
Apparently, Blizzard did not wish for the end of the deal. They even made last-minute offers to save the deal. But at that time, NetEase was apparently so angry with Blizzard that they had even the Orc statue smashed.
How did it come to pass that the business partners parted ways in a dispute?
Head of Activision Blizzard felt threatened
What are the new details? The New York Times now reports what allegedly led to the separation of both companies.
In October 2021, there was a conversation between Activision Blizzard and NetEase. The discussion took place over a Zoom call. However, both sides would have interpreted what was discussed quite differently:
- NetEase reportedly saw their behavior as “accommodating”.
- But Activision Blizzard interpreted their behavior as “threatening”.
It is said that even prior to the negotiations, NetEase was dissatisfied with the situation: The head of Activision Blizzard, Bobby Kotick, had made increasingly outrageous demands in previous years. For example, in 2018, NetEase invested $100 million in the developer Bungie, which was then still partnered with Activision Blizzard. However, Kotick criticized this investment, claiming that Bungie was already lagging behind on Destiny.
NetEase, in turn, wanted to change the deal with Activision to safeguard against the growing pressure from the Chinese government on tech companies:
- NetEase wanted Activision to disclose more internal data to appease the Chinese regulators.
- Additionally, they wanted more influence over the games to better comply with the new rules in China.
Kotick believed NetEase was trying to blackmail him with “veto” against the Microsoft deal
However, something must have gone wrong during the call in October 2022. As reported by the New York Times, the conversation was conducted through translators, and at some point, they discussed the planned deal in which Microsoft wants to buy Activision Blizzard and that they need the “okay” from regulators worldwide.
Kotick understood the situation to mean that NetEase threatened him, saying they would persuade the Chinese government to block the deal – depending on how the negotiations between Activision Blizzard and NetEase went.
However, NetEase denies that such hints were made.
Apparently, this feeling of being extorted led Kotick to an early end of the negotiations.
The New York Times reported that a month after the Zoom call, both companies ended the discussions.
Discussions went so poorly that NetEase destroyed Blizzard statue
Later, Activision apparently made another offer to NetEase. NetEase was to pay $500 million as an advance payment. With this, Blizzard apparently wanted to prevent the games from being copied or falling into the hands of the Chinese government. However, the proposal was perceived as very brazen by the Chinese side.
It is said that Activision Blizzard offered NetEase a last-minute extension of the existing deal for 6 months – but NetEase then rejected the extension as unfair. NetEase stated that it was like “living together even though you are already divorced.”
Ultimately, the games went offline, and 100,000 players alone in WoW became homeless.
NetEase destroyed the World of Warcraft sculpture from Blizzard in front of 30,000 people:
After Blizzard separation: NetEase goes wild, destroys Orc statue and insults wildly
