Activision Blizzard and NetEase will call it quits soon.
The video game developer recently revealed that its licensing agreement with the Chinese online PC and mobile game developer and publisher would soon end after the latter turned down its extension offer.
Activision Blizzard previously established its licensing agreement with NetEase on April 16, 2009, paving the way for Activision Blizzard to release its games in mainland China through NetEase, per the Chinese company's statement in 2009.
Activision Blizzard - NetEase Licensing Partnership End Details
People visit a stand of Netease Youdao at the 2018 Global Mobile Internet Conference (GMIC) in Beijing on April 27, 2018.
Blizzard mentioned in a statement that NetEase had turned down a proposal to extend their 14-year partnership for six months, though it did not reveal the terms of this extension, per Reuters.
Although Blizzard didn't disclose what made NetEase decline its offer, a Guancha report citing an Observer.com article said that Blizzard proposed "sky-high prices" for the extension, with the Chinese company describing some of the deal's terms as "disgusting."
Previously, Blizzard and NetEase shared all profits in an even 50-50 split. However, Blizzard changed this in the extension deal's terms, with the company receiving more of the profits than previously agreed on.
The company will allegedly adopt a global synchronization strategy for its game pricing when it previously charged 20% lower for its national servers in China than in other regions of the world.
Blizzard also asked NetEase to follow the Diablo Immortal model to develop its other IP mobile games for global distribution, but NetEase could only enjoy the revenue share of the Chinese market.
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Furthermore, Blizzard also required NetEase to pay a deposit or prepayment to guarantee the completion of "Article 2" unless it wants to be "punished."
A person familiar with the proceedings and spoke on the condition of anonymity stated that had NetEase agreed to the extension deal, it would have meant that the company would work for nothing.
Netease mentioned in a public statement that it tried to reach an amicable agreement with Blizzard to extend its licensing partnership. However, negotiations broke down between the two companies on some key terms of cooperation.
Chinese gamers did not take the news well. According to Bloomberg's report, the Chinese gaming community has been largely critical of Blizzard, with others going to Weibo to call the extension a means to "bridge the gap" while it negotiates a better deal with a competitor.
What Happens To Activision Blizzard's Presence In China?
NetEase's rejection of Activision Blizzard's terms has negative consequences for both Activision Blizzard and the Chinese gaming community. NetEase mentioned that it would be discontinuing Activision Blizzard's game service in China on Jan. 23.
This discontinuation means that Chinese players will be unable to play games from Activision Blizzard starting on Jan. 23 until Activision Blizzard can find another publisher to release its games in China.
These Activision Blizzard games include Diablo, World of Warcraft, and Overwatch.
Meanwhile, Chinese players of World of Warcraft will have the option to store their progress through a new service Blizzard will be providing to keep their account safe in the interim.
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