With Overwatch deal, China’s NetEase throws down gauntlet to rival Tencent

PUBLISHED : Tuesday, 30 June, 2015, 8:00am
UPDATED : Tuesday, 30 June, 2015, 8:34am

Chinese online games operator NetEase has landed a major new licensing deal that could help it challenge Tencent's lead in China's first-person shooter (FPS) video game market segment.

Nasdaq-listed NetEase, which operates Blizzard Entertainment's World of Warcraft franchise in the Chinese market, has obtained an exclusive, three-year licensing agreement for the US developer's upcoming Overwatch title. 

William Ding Lei, the founder and chief executive at Guangzhou-based NetEase, said over the weekend that the company's new deal with Blizzard "expands our cooperation with a brand-new franchise".

The much-anticipated Overwatch is the first-ever FPS game developed by Blizzard, a division of gaming company Activision Blizzard.

"We view this as an important win and milestone for NetEase," Alicia Yap, the head of internet research at Barclays, said in a report published on Monday.

"If this game becomes a successful hit in China, which we believe is highly likely, it might potentially attract away some existing FPS players [from] Tencent's platform."

Yap pointed out that Hong Kong-listed Tencent has been the leading FPS game operator in mainland China since 2008, when the Shenzhen-based internet giant introduced the popular Crossfire title in the country. 

Crossfire was developed by SmileGate and published by Neowiz Games, both South Korean companies, for Microsoft's Windows platform.

"Many Chinese gamers [have] experienced playing the FPS genre given the success of Crossfire," Yap said. 

She said Chinese are attracted to Blizzard games "due to the high quality, rich graphics and interesting game play" in such titles as World of Warcraft, Diablo and StarCraft.

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Blizzard unveiled Overwatch in November last year in the US. The game takes place in a technologically advanced and war-torn version of earth, where an international task force of soldiers, scientists and adventurers known as the Overwatch have come together to restore peace.

"We're looking forward to delivering an awesome experience to Chinese players, and we can't wait to share more about the game and the Overwatch universe in the months ahead," Blizzard chief executive Mike Morhaime said.

The game is expected to be available around the world from next year.

China’s video game market grew to US$18.5 billion last year, up from US$13.08 billion in 2013, according to data from the country's Game Publishers Association.

The state-run China Internet Network Information Centre estimated there were 377 million game players - online and mobile combined - at the end of December on the Chinese mainland.