Earlier today, Blizzard published a statement – they haven’t renewed licensing agreements with NetEase, and thus will suspend access to their games in that country starting on January 23. Blizzard’s president Mike Ybarra said that they are looking for alternatives to bring the games back, but if nothing is decided, Chinese players will soon lose access to all of the Blizzard titles, including Hearthstone.
Chinese market makes up for only 3% of the total Activision-Blizzard revenue (because the biggest earners like Call of Duty or Candy Crush are not particularly popular in there), but it’s a pretty big deal for the Blizzard part of the company. World of Warcraft, Hearthstone and Diablo are all pretty popular in China, and the country makes for a much bigger percentage of those games’ revenue.
It would be a big blow to Hearthstone, given that the Chinese server has the biggest playerbase out of all the regions, not to mention the major presence of Chinese players in competitive play, deck building etc. Many of them have invested years of play time (and/or a lot of money) into the game and it would be really bad for them to just suddenly lose access to their accounts.
As for the reason why – there have been some speculations already. To give you a little background: Chinese authorities have been pushing against video games hard for the last few years. If you want to release a new game there, you need to have government permission, and they haven’t been giving out almost any of those for over a year now. If you add things like putting hard limits on gaming time for minors (3h per week, only on weekends), making the lives of gaming giants like Tencent and NetEase as difficult as possible, or pushing other anti-gaming regulations, everything becomes clearer. If I had to guess, it might be related to that. Chinese government is heavily against video games, so not renewing licenses would fit right into that narrative and other things they’ve been doing. If you want to read more about it, this Wikipedia article has a good summary.
Alternatively, it might not a permanent thing and they just want to switch a partner and make someone else publish/operate their games in China. Maybe Tencent? But again, given all of the above, I’m not sure if Chinese authorities will even allow that. While I’m obviously not a big fan of Chinese governemnt, for the sake of Hearthstone I hope that Blizzard will find a solution.
Update: Many sources are saying that the reason for termination is that NetEase didn’t like their side of the contract. Basically, Blizzard didn’t offer them enough money, so they walked away. If that’s true, it means that Blizzard will likely try to re-negotiate with NetEase OR find another partner. The question is whether they will manage to do it before January 23th and what Chinese officials will have to say about it (I’m not sure if they will have to get it approved again).
Read the official statement below:
IRVINE, Calif.–(BUSINESS WIRE)–Nov. 16, 2022– Blizzard Entertainment, Inc. announced today that it will be suspending most Blizzard game services in mainland China due to the expiration of the current licensing agreements with NetEase, Inc. on January 23, 2023. This includes World of Warcraft®, Hearthstone®, Warcraft® III: Reforged, Overwatch®, the StarCraft® series, Diablo III®, and Heroes of the Storm®. Diablo Immortal® co-development and publishing is covered under a separate agreement between the two companies.
Blizzard Entertainment has had licensing agreements with NetEase since 2008, covering the publication of these Blizzard titles in China. The two parties have not reached a deal to renew the agreements that is consistent with Blizzard’s operating principles and commitments to players and employees, and the agreements are set to expire in January 2023.
We will suspend new sales in the coming days and Chinese players will be receiving details of how this will work soon. Upcoming releases for World of Warcraft: Dragonflight, Hearthstone: March of the Lich King, and season 2 of Overwatch 2 will proceed later this year.
“We’re immensely grateful for the passion our Chinese community has shown throughout the nearly 20 years we’ve been bringing our games to China through NetEase and other partners,” said Mike Ybarra, president, Blizzard Entertainment. “Their enthusiasm and creativity inspire us, and we are looking for alternatives to bring our games back to players in the future.”
Wow i feel like this is pretty huge news. You mention that “Chinese market makes up for only 3% of the total Activision-Blizzard revenue” but i wonder how much of that 3% exactly comes from Blizzard franchises (wow, starcraft, diablo, hs). Also 3% is still a big deal when you are talking in millions and even billions, so it’s interesting how the future of blizzard and hs will look like after this heavy blow. And there is also the fact that one the biggest playerbase region suddenly dissappearing, will impact the deckbuilding element, which dictates the meta, which in turn impacts the overall enjoyability of the game.
Oh yeah, 3% is still a TON of money in this context, and no company would like to just drop their revenue by 3% for no reason. I just wrote that because I immediately started hearing that they lost their biggest source of income etc. which might not be exactly true for the company as a whole.
But I honestly think that for Blizzard itself it might be closer to 20-30%. I know that playerbase does not scale 1:1 with spending, but in case of Hearthstone, China is by far the biggest region. If we look at the number of players reaching Legend, China alone is comparable to three other servers combined! WoW is also huge in China, around 1/3 of the whole playerbase was Chinese (stats are from a few years ago so it might have changed a bit, but it just shows how popular the game is there). Overwatch or Diablo are not AS popular as HS/WoW, but still big.
This is tragic for the Chinese playerbase, which includes some of our most influential players. But in all honesty, I’m kind of glad that Blizzard will no longer do business in China because of political reasons.
The Chinese government is oppressive and it’s tried to force its propaganda on Blizzard before (Hong Kong tournament interview scandal). I think it’s for the best that Blizzard doesn’t have that government to worry about. I know this is getting political but the Chinese party has a terrible human rights record and I’m not ashamed to point it out, so for that reason, there is a silver lining in not relying economically on them. This could mean that Blizzard has more creative space for certain things.
Blizzard also has a terrible human rights record, it’s the perfect match.