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Blizzard Entertainment announced that it’s suspending game services in China starting early next year. Its licensing agreements with Chinese game publisher NetEase expire on January 23, 2023, and according to Blizzard, it’s not going to renew the agreement. The two companies last renewed in 2019.

Blizzard says of its negotiations with NetEase: “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.” It has not given any further details, but Bloomberg reports the ownership of player data and intellectual property was one of the sticking points. We have also seen tension between Blizzard and Chinese authorities since the last renewal.

Starting in January, Blizzard will suspend services for World of Warcraft, Warcraft III, Hearthstone, Overwatch 2, Starcraft, Heroes of the Storm and Diablo III. The two companies partnered in 2008 to publish certain games in China, including the aforementioned titles. It also collaborated on the development of Diablo Immortal, which will not be affected as it’s under a separate agreement. Blizzard will suspend sales in China in the coming days.

Blizzard president Mike Ybarra expressed Blizzard’s appreciation for the Chinese audience, and said the company is “looking for alternatives to bring our games back to players in the future.” According to a recent Newzoo report, the Chinese market is no longer growing at the pace it once was, thanks in part to more restrictive regulations on gaming time and new releases.

NetEase also posted its own update.

NetEase acknowledged that its license to publish Blizzard titles in China will expire on January 23. During this time when it was publishing Blizzard games over the years, NetEase grew to be one of China’s leading internet and online game services providers, ranking as the No. 5-largest game company in the world, according to market researcher Newzoo. Activision Blizzard, which owns Blizzard, is No. 9 on the list. “We have put in a great deal of effort and tried with our utmost sincerity to negotiate with Activision Blizzard so that we could continue our collaboration and serve the many dedicated players in China,” said William Ding, CEO of NetEase, in a statement. “However, there were material differences on key terms and we could not reach an agreement. We hold high regard in our product and operational standards and abide by our commitments to Chinese players.” Ding added, “We are honored to have had the privilege of serving our gamers over the past 14 years and have shared many precious moments with them during that time. We will continue our promise to serve our players well until the last minute. We will make sure our players’ data and assets are well protected in all of our games.”

In its last earnings announcement, Activision Blizzard also noted a risk its agreement would not be renewed. NetEase said the net revenues and net income contribution from these licensed Blizzard games represented low single digits as a percentage of NetEase’s total net revenues and net income in 2021 and in the first nine months of 2022. The expiration of such licenses will have no material impact on NetEase’s financial results, the company said. And it said the co-development and publishing of Diablo Immortal is covered by a separate long-term agreement and will continue.

Dean Takahashi contributed to this report.

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