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Microsoft, NetEase Effort to Revive Warcraft & Other Games in China

China’s NetEase (9999.HK) and U.S. gaming giant Microsoft (MSFT.O) announced on Wednesday that they will bring popular titles like “World of Warcraft” back to China after a fallout involving the developer ended their nearly 15-year partnership.

The two companies stated they are working to reintroduce online games from Blizzard Entertainment, a subsidiary of Activision Blizzard acquired by Microsoft last year, to the world’s second-largest economy, starting this summer. NetEase was the publisher of Blizzard games in China from 2008 to 2023.

“We at Blizzard are thrilled to reestablish our partnership with NetEase and to work together, with deep appreciation for the collaboration between our teams, to deliver legendary gaming experiences to players in China,” said Blizzard Entertainment President Johanna Faries in a joint statement.

Also Read: Fitch Downgrades China’s Outlook Amid Growth Challenges

NetEase and Microsoft also agreed to explore bringing NetEase titles to Microsoft’s Xbox and other gaming platforms, a move that “might be more consequential in the long run for NetEase as it aspires to increase its overseas exposure,” according to Nomura’s head of China internet equity research, Jialong Shi.

NetEase’s share price rose about 2% in Wednesday morning trade, adding to an around 3% gain on Tuesday fueled by news of the impending announcement from China’s second-largest video games company by revenue after Tencent (0700.HK).

Several Blizzard games were taken offline in China in January 2023 after the developer terminated the partnership with NetEase, citing disagreements over intellectual property control. The pair subsequently sued each other.

Tensions eased after Microsoft’s October acquisition of Activision Blizzard, followed by management changes. Chinese media then reported that Microsoft and NetEase were seeking ways to relaunch Blizzard games in China.

The renewed publishing agreement covers Blizzard’s flagship games “World of Warcraft” and “Hearthstone,” as well as other titles in the “Warcraft,” “Overwatch,” “Diablo,” and “StarCraft” franchises, according to Wednesday’s statement.

“We have always expected NetEase will regain distribution rights of Blizzard’s games, and the reengagement translates to about 2% incremental earnings for NetEase,” said Morningstar analyst Ivan Su.

Blizzard games were popular in China, with local media estimating Chinese players of “World of Warcraft” alone at around five million in 2009 after NetEase became the publisher. The breakup sparked outcry, with Chinese netizens bemoaning lost access to their favorite games. Over a million users requested refunds for unspent in-game credit shortly after the games were taken offline, according to NetEase customer service.

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