Thread by @TheRealJoshYe

BREAKING: Blizzard to suspend game services in China as NetEase licence ends | Reuters
Blizzard said it had not reached a deal with NetEase that is "consistent with Blizzard's operating principles and commitments to players and employees." 1/
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New sales would be suspended in the coming days and Chinese players would soon receive further details, but it added that upcoming releases for 'World of Warcraft: Dragonflight', 'Hearthstone: March of the Lich King', and season 2 of 'Overwatch 2' will proceed later this year.2/

Blizzard has had licensing agreements with NetEase since 2008, covering the publication of Blizzard games in China. Its slate of games include hits such as World of Warcraft, Diablo, Hearthstone, Overwatch and games in the WarCraft and StartCraft franchises. 3/

NetEase became China's second biggest gaming company in large part due to being able to publish Blizzard games there. It became a 1st-tier gaming company in China when Blizzard ditched its previous partner The9 and allied with NetEase in 2009. 4/

Since then, The9 went from being one of China's most famous to being an utterly inconsequential player in the industry, shifting its attention to crypto-mining and NFTs in recent years. 5/

In the statement, Blizzard said "Diablo Immortal co-development and publishing is covered under a separate agreement between the two companies." So its service in China will likely continue it seems.

NetEase shares have plummeted more than 10% on the news. 7/

NetEase has a statement:
NETEASE: WAS UNABLE TO AGREE ON SOME KEY TERMS OF COOPERATION WITH ACTIVISION BLIZZARD AFTER LENGTHY NEGOTIATIONS
NETEASE: VERY SORRY THAT BLIZZARD ANNOUNCED THE COOPERATION TERMINATION, WE WILL HAVE TO ACCEPT THIS DECISION 8/

网易一直在尽最大努力和动视暴雪公司谈判，希望推进续约。经过长时间的谈判，我们仍然无法就一些合作的关键性条款与动视暴雪达成一致。我们非常遗憾动视暴雪在今天先行宣布了停止合作，我们将不得不接受此决定。网易将继续履行职责，为我们的玩家服务到最后一刻。

The absence of Blizzard games could cause a 6-8% drop in NetEase's total revenue next year, analysts from Daiwa Capital Markets wrote in a research report on Nov.9. 10/

The estimate is founded on the basis that licensed games caccount for around 10% of NetEase' total revenue and Blizzard accounts for 60-80% of licensed games. 11/

On the Activision side, its agreements with NetEase contributed around 3% of Activision Blizzard's consolidated net revenues in 2021 (USD8.8bn). However, ending partnership with NetEase costs Activision more than what meets the eye. 12/

Blizzard will have to collaborate with another publisher in China and might have to resubmit its gaming approval applications, which would be time consuming. 13/

There were hints of frictions between Blizzard and NetEase, with Simon Zhu, NetEase president of global investment and partnership, posting a bitter message on LinkedIn where he pins blame on a single 'jerk' but stopped short of revealing what exactly caused the divorce. 14/

Citi analysts said possible factors impacting the partnership included Microsoft's pending acquisition of Activision or other differences between the two companies that could include culture. 15/

Blizzard's announcement became the top trending topic on China's Weibo platform on Thursday, gaining over 100 million views as users expressed their shock and sadness, with many saying they had played its games for more than a decade. 16/

NetEase CEO William Ding just spoke about the soured deal with Blizzard. Here’s what he said. 这是刚刚丁磊在业绩会上就暴雪终止续约的回答。