Two full months after the official announcement of the breakup, Blizzard and NetEase reappeared in the field of public opinion and fought another round of war of words. Once the lovers who have been married for 14 years break up, the attitude of blaming each other is no different from that of many unhappy spouses in the world.
On November 17 last year, Netease was “backstabbed” by Blizzard Entertainment on the day it released its third quarterly report. Blizzard unilaterally announced that the two parties had not reached a contract renewal agreement, and would suspend most of Blizzard’s game services in mainland China after January 23, 2023. . It is reported that for the contract renewal, Blizzard’s requirements include: to further increase Blizzard’s sharing ratio on the basis of 50%, to control the data of Chinese players by Blizzard, to pay a huge deposit or prepayment by Netease, and to prepay by Netease when signing the contract. With a two-year cooperation fund of hundreds of millions of dollars, NetEase will continue to develop the global distribution of Blizzard’s IP mobile games under the premise of only enjoying the revenue share of the Chinese market.
In the statement on January 17, Blizzard claimed to try to renew with NetEase for 6 months, but was rejected by NetEase. Faced with such a blatant move to transfer the firepower of players on the national server, NetEase responded that night that Blizzard’s continued negotiation with potential partners during the contract extension with NetEase is tantamount to looking for a horse on a donkey, which does not conform to business logic and is unacceptable.
Delaying the Breakup: Blizzard Wants to Be Seamless
Tracing back to the reason why Blizzard suddenly turned back to Netease for a short-term reunion, it is actually the same as the reason for the breakup. Behind it is Microsoft’s potential acquisition of Activision Blizzard, and it is influenced by a key figure-Activision Blizzard CEO Bobby Kotick.
During his tenure as the head of Activision Blizzard, Bobby Kotick, a non-gamer and non-technical R&D personnel, took many actions to excessively interfere with the development progress of various games, resulting in multiple game delays, poor response to the finished product, and the departure of the studio, which led to The dissatisfaction of many gamers has been resolved, and in the past 4 years, it has caused the loss of 13 million active users.
In 2017, Bobby Kotick began to squeeze out Blizzard Entertainment co-founder, former president and CEO Mike Morhaime, causing the latter to leave in 2019. And it was Mike Morhaime who contributed to the cooperation between Blizzard and Netease, and opened up the Chinese market for Blizzard-in 2008, Netease replaced Ninth City as Blizzard’s agent in China. During the cooperation period, the relationship between the two parties continued to heat up, and many of the games they cooperated with achieved good performance in the domestic market.
Game companies in the industry, Netease, and national server players once believed that the two parties would continue to extend this “long-distance love race”. However, a sudden change occurred. In November last year, when Activision Blizzard released its third quarterly report, it suddenly announced that its contract with NetEase had expired and was difficult to renew. 3% of Activision Blizzard’s revenue. But in fact, excluding the two major divisions of Activision and King, the products represented by NetEase accounted for 14.45% of Blizzard Entertainment’s revenue. And because Blizzard only authorizes and does not participate in operations in the domestic market, the proportion of net profit in its revenue is not low.With the overall decline in user numbers, the importance of the Chinese market to Activision Blizzard is beyond doubt.
But the relationship between Bobby Kotick and NetEase has already been formed. In 2018, NetEase donated $100 million to Bungie, which was owed development funds, disrupting Bobby’s low-cost acquisition of the game studio. After Microsoft announced the acquisition of Activision Blizzard, Bobby, who knew that he might not be able to keep the CEO position, was determined to seek more benefits for himself before the acquisition was completed. Raising the price to NetEase was one of the means to achieve this goal.
After the formal termination of the contract between the two parties, the NetEase team, which was used to operate the Blizzard game subsidiary in mainland China, began to disband. The team of more than 100 people now only has more than 10 employees to deal with the aftermath. At this time, Blizzard suddenly proposed a six-month extension, and directly stated that it will not stop negotiating with other potential partners during the contract extension with NetEase, which is really ironic.
It’s hard to find the next home: sincerely recruiting the family bucket agent
The reason for Blizzard to renew the contract with Netease may be that it is not easy to find a suitable receiver. Blizzard’s ideal agent in China needs to have the ability to develop mobile game IP and be able to take over Blizzard’s family bucket. Not many manufacturers can meet these two conditions at the same time.
Recently, it has been reported that Blizzard is negotiating agency issues with four Chinese companies, and has entered the critical second stage. Previously, although many companies such as Ninetowns, Tencent, and Byte were exposed to be in contact with Blizzard for the agency of the national server, no partner clearly expressed their willingness to take over.
In 2022, Bobby Kotick proposed to Tencent to buy out the overseas distribution rights of “Call of Duty Mobile Games” at a one-off price, and threatened to stop promoting CODM, and then announced that the mobile game “Call of Duty: War Zone” would be launched in 2023 for Tencent. Leave a bad impression of being difficult to work with. Today, Tencent, which is most capable of accepting Blizzard’s national service agent, instead took advantage of the opportunity of Blizzard’s suspension of the service to launch a high imitation game of “Warcraft” “Taris World”, trying to snatch the Chinese players lost by Blizzard.
Previously, ByteDance spent hundreds of millions of dollars to win the agency rights of a certain “Call of Duty” in the national server, but in the end it failed because of the version number. Since last year, ByteDance has reduced its game business, and it is unlikely to take over Blizzard’s national service agency. For Perfect World, Bilibili and other manufacturers who may be interested in taking over, the arrogance shown in Blizzard’s attitude towards long-term partner NetEase is also very discouraging.
The game version number is alsoA major obstacle between Blizzard and potential receivers is strict review and slow process for domestic games, and it is even more difficult for imported games to re-apply for a version number. At the end of December 2022, the National Press and Publication Administration released the approval information for domestic online games in December. Among them, 548 days have passed since the last release of the version number of imported games, and the number of approved games has decreased by nearly 40%.
Due to various reasons, it is really difficult for Blizzard to find the next national server agent. However, Microsoft’s acquisition of Activision Blizzard was originally scheduled to be completed by July 2023. Before that, Activision Blizzard hoped to at least maintain its profitability in China on the original terms. The old partner NetEase is indeed in the short term. best choice. At that time, if Bobby Kotick can continue to sit firmly as the CEO, he can continue to make money from the agency rights of the national server. If he is unfortunately withdrawn, he can also get a severance package of 520 million US dollars, and find a home for Blizzard in China. It is logical that Microsoft will take over the task.
Judging from the current situation, Bobby Kotick’s calculations have obviously come to nothing: on the one hand, the Microsoft acquisition is not progressing smoothly, and the transaction deadline is likely to be postponed; Not yet settled.
In this context, Blizzard also had to lower its profile: a few days ago, Netease revealed internally that Blizzard has lowered its share ratio in most games during negotiations with potential national server agents. For example, the ratio of “Overwatch” has been adjusted from 5:5 to 3:7, but for the cash cow of “Warcraft”, Blizzard still bites the big head.Even so, most potential partners are only interested in a certain game of Blizzard, and there are very few agents who are willing to take over the family bucket.After all, apart from “Warcraft”, it can be profitable after sharingblizzard gamesNot many.
Three-lose ending: Blizzard’s own losses are the heaviest
To sum up, the result of the suspension of Blizzard’s game national server for more than one year may be unavoidable.
The most direct chain reaction of this matter is the loss of national server players.Although the overall loyalty of Blizzard game players is high, Blizzard’s various psychedelic operations under the leadership of Bobby Kotick have chilled many old players. During the shutdown period in China, it is difficult to guarantee that players will not switch to other servers or leave the pit directly. After all, it was Blizzard who rudely announced the termination of cooperation first, disregarding the emotions of players in the national server for many years. The renewal of the contract was only discussed two weeks before the contract expired, just for the sake of seamless connection.
What’s more, Tencent is not the only one who intends to rob Blizzard users. Since Blizzard announced the termination of the cooperation for the first time, “Guild Wars 2” and “Naishuihan” also launched the “Warcraft Veteran Theme Server” in due course. Players can choose suitable games as substitutes for the window period.
In 2021, China’s domestic video game market revenue will reach 45.5 billion U.S. dollars, making it the world’s largest video game market. According to the third quarterly report for 2022, due to the launch of the mobile game “Diablo: Immortal” jointly created with NetEase in China, Activision Blizzard’s player bookings on mobile platforms increased by 20% year-on-year. Blizzard’s move single-handedly destroyed the player accumulation of Blizzard games in China for more than 20 years, and it was a catastrophic blow to Blizzard’s national server.
As the other party in the breakup incident, Netease will naturally not lose nothing. But compared with Blizzard, the damage to NetEase caused by contract termination is relatively controllable.
The 2019-2021 financial report shows that NetEase’s revenue from agency games accounted for 7.5%, 9.1%, and 9.5% of total revenue, respectively, and the game manufacturers represented by NetEase include Microsoft and other companies in addition to Blizzard. In terms of the secondary market, on January 17, when Blizzard was backstabbed, NetEase’s Hong Kong stock fell only slightly by 0.15%. On the day after NetEase released the situation statement, NetEase’s Hong Kong stock even rose by 6.5%. This also shows that the damage caused by the breakup incident to NetEase’s stock price has been digested by the market after the first official announcement.
The second day after tearing up his predecessor, NetEase’s “Onmyoji” who won the advantage of public opinion could not fail. The new Blizzard green tea launched in its own park was in short supply, and the queue time was as long as 4 hours.
After the joke, review the whole thing, in fact, there is no real winner. Today’s results can’t even be called zero-sum. Blizzard, NetEase and even players have not benefited from it. It can be called the worst ending of Pareto.The key to solving this problem may still be Microsoft: After Microsoft completes the acquisition, it must either withdraw Bobby Kotick and restart the agency contract renewal negotiations, or Microsoft will operate the Blizzard game on the national server. Regardless of the type, the damage suffered by the national server players in this breakup is irreparable.
