NetEase and Blizzard said to reach new deal set to bring World of Warcraft back to China

After the partnership fell apart in January, Blizzard sought to work with other Chinese companies before renewing with NetEase, Chinese media reported
The agreement comes after Microsoft closed its deal for Activision Blizzard, and as Beijing seeks to reassure the video gaming market amid regulatory uncertainty

Video gaming

Coco Fengin Beijing

Published: 6:00pm, 26 Dec 2023

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Reports that US video gaming giant Blizzard Entertainment has struck a new deal with NetEase to bring its flagship title World of Warcraft back to China sparked online speculation that the two companies may have reached a detente after the American firm suspended services in the market in January.

Blizzard has sought to work with other Chinese publishers to bring its best-known game back to the country, but ultimately renewed its partnership with NetEase, Chinese technology media outlet 36Kr reported on Monday. Blizzard initially picked NetEase to run World of Warcraft in China in 2009 until the deal collapsed earlier this year.

Once the new deal is signed, it will take at least half a year for the game to return, as the companies must rebuild the operations team and test servers, according to the report.

Blizzard and NetEase did not immediately respond to requests for comment on Tuesday.

China approves Microsoft’s Activision Blizzard deal, bucking US, UK opposition

After the news broke late on Monday, #NetEaseBlizzardReunion became a top-trending topic on microblogging platform Weibo, and it remained among the top 10 topics through Tuesday morning.

World of Warcraft has huge appeal to gamers in the world’s largest video gaming market by revenue owing to the title’s long-term presence in China. Its popularity has been declining, however. It had 5 million active players in the country in 2009, but that had dropped to just 350,000 by January this year, when Blizzard suspended service, according to state media Xinhua News Agency and gaming information provider Wowdata.top.

Before their partnership expired, the two companies had tussled over terms for extending the deal. Blizzard said a week before the expiration that NetEase had rejected its proposal for a six-month extension, but NetEase described the offer as unfair.

NetEase filed multiple lawsuits against Blizzard, including one in April demanding US$45 million as compensation for refunds it paid to affected gamers. In a separate case, the Chinese firm complained about Blizzard and The9 – the domestic operator of World of Warcraft before the NetEase deal in 2009 – over rights infringement.

Blizzard reacted with two lawsuits in June against NetEase that allege intellectual property infringement and unfair competition, as the Chinese firm’s self-developed game Justice launched an initiative to woo World of Warcraft fans, according to Chinese media Yicai.

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The resurrection of China’s video gaming industry

Without a local partner, Blizzard had to discontinue support for many popular titles in China, including Overwatch, Hearthstone, StarCraft and Diablo III. China’s strict video gaming regulations require that foreign titles only be published via local distributors to ensure they have proper licensing – a process that often involves sanitisation to appease censors. Regulator the National Press and Publication Administration (NPPA) this year approved 98 imported games, it said on Friday.

Blizzard’s potential China comeback is on the heels of Microsoft’s US$68.7 billion acquisition of the studio’s parent company Activision Blizzard, which cleared its biggest regulatory hurdles this year. Bobby Kotick – the gaming behemoth’s CEO who, as The New York Times reported, was seen by NetEase as a tough person to deal with – will step down on December 29.

China’s video gaming industry has undergone considerable tumult in the last couple of years after a 2021 crackdown limiting how long minors can spend playing – now one hour a day only on Fridays, Saturdays, Sundays and statutory holidays. Things looked to be on the upswing after the end of an eight-month licensing freeze last year, but game company stocks tanked again over the weekend when Beijing unveiled a new draft regulation that would limit spending on online games.

Following the market upheaval, the NPPA moved to reassure the market that it was listening to concerns. It approved 105 new titles for monetisation in China on Monday, in the agency’s largest monthly batch of approvals since July 2022, bringing the total for 2023 to 1,076.

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