Since 2008, Blizzard games have been released in mainland China through licensing agreements with NetEase. Blizzard has announced that these licensing agreements will end on January 23, 2023 and will not be renewed (open in new tab).The World of Warcraft, Hearthstone, Overwatch, Diablo 3, StarCraft series and "Heroes of the Storm" games and services will end in China on the same date.

"The parties have not reached an agreement to renew the contract that is consistent with Blizzard's management philosophy and commitment to its players and employees," a Blizzard statement said.

In an announcement sent to us by NetEase, CEO William Ding said, "We have made great efforts and negotiated with Activision Blizzard in the utmost good faith to continue our collaboration and to serve the many dedicated players in China. We have made every effort to negotiate with Activision Blizzard in the most good faith so that we can continue our cooperation and serve the many dedicated players in China. However, we were unable to reach agreement due to significant differences on key terms. We value our products and operating standards highly, and we stand by our commitments to players in China.

New sales of Blizzard games in China will cease "in the coming days" and Blizzard has stated that "Chinese players will receive details of how this will work in the coming days." However, the scheduled releases of World of Warcraft's "Dragonflight" expansion, Hearthstone's "March of the Lich King" set, and Overwatch 2 Season 2 will go ahead as planned. Diablo Immortal will not be affected, as it is co-developed with Chinese company Tencent and covered by a separate licensing agreement.

Recently, the Chinese government tightened its already strict regulations on the tech industry, including an eight-month freeze on video game licensing and new limits on online game playing time for those under 18, resulting in the industry's first decline in users and revenue in 14 years. Meanwhile, NetEase's mobile MMO based on "World of Warcraft" was canceled in August after three years of development, which Bloomberg (opens in new tab) attributed to a disagreement over financial terms. Upon receiving news of the cancellation, we reached out to Blizzard. The company said via email, "We continue to have a very successful relationship with NetEase and it is completely untrue that there was a financial dispute."

In its November third-quarter financial report (opens in new tab), Blizzard warned investors that its licensing agreements in China may be coming to an end, stating, "We are in discussions to renew these agreements, but it is possible that a mutually satisfactory agreement may not be reached." He also stated that these contracts "will contribute approximately 3% of Activision Blizzard's consolidated net revenues in 2021."

While it may not hurt Activision Blizzard as a whole, Blizzard's games and properties are popular in China. The movie "Warcraft" was not a flop because Chinese audiences came in droves, setting a record for the largest movie release in Chinese history. Blizzard also claims that business in China did not influence its decision to suspend Hearthstone Grandmaster Chung "blitzchung" Ng Wai after he appealed for Hong Kong's freedom in a Hearthstone Hearthstone post-match interview While it is hard to believe that Hearthstone's growth in China (open in new tab) while spending in the U.S. declined was not factored into this puzzling decision. [Blizzard President Mike Ybarra said in a company statement, "We are extremely grateful for the passion shown by the Chinese community over the nearly two decades we have been bringing our games to China through NetEase and other partners. Their enthusiasm and creativity inspire us and we look forward to exploring options to bring our games to players in the future."