Activision Blizzard and NetEase end 14-year deal.

Activision Blizzard and Chinese gaming firm NetEase are terminating their 14-year licensing agreement, which will result in the closure of popular game franchises such as World of Warcraft and Overwatch in China.

The agreement, signed in August 2008, will expire in January 2023 because the two companies could not agree on renewal terms.

World of Warcraft, a huge multiplayer online game, is extremely popular in China. NetEase’s Hong Kong-traded shares fell 9% on Thursday.

Blizzard and NetEase had significant disagreements during the deal negotiations

It means that Chinese gamers will no longer have access to titles from blockbuster franchises like World of Warcraft, StarCraft, Hearthstone, Overwatch, and Diablo, which Microsoft should acquire in a $69 billion deal for Activision Blizzard. According to Blizzard, there won’t be new Blizzard game sales in mainland China “in the coming days.” As is customary, World of Warcraft: Dragonflight, Hearthstone: March of the Lich King, and Season 2 of Overwatch 2 will come later this year. In 2021 and the first nine months, NetEase’s net revenues and net income contributions from licensed Blizzard games represented low single digits of NetEase’s overall sales and profits.

The termination of the agreement “will have no material impact on NetEase’s financial results,” according to the company.

The release of the highly anticipated mobile and PC game Diablo Immortal in China will be unaffected because a separate agreement between the companies covers it. The game’s release date moved to June 23 due to network and performance optimization issues.

The move on Thursday is critical for the Chinese gaming industry, which has only recently emerged from a months-long regulatory freeze. The industry has come under intense scrutiny as part of a broader regulatory crackdown on China’s domestic technology firms.