Microsoft, NetEase to re-launch Warcraft games in China

China's NetEase and U.S. games peer Microsoft said on Wednesday they will bring popular titles including "World of Warcraft" back to China after a fallout involving the developer that ended an almost 15-year partnership.

The pair said they are working to bring online games from Blizzard Entertainment, a subsidiary of Activision Blizzard which Microsoft bought last year, back 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.

NetEase and Microsoft also said they have agreed to explore bringing NetEase titles to Microsoft's Xbox and other gaming platforms.

This "might be more consequential in the long run for NetEase as it is aspiring to increase its overseas exposure," said Nomura 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 fuelled by news of the impending announcement from China's second-largest video games company by revenue after Tencent

A number of Blizzard's games were taken offline in China in January 2023 after the developer terminated the partnership with NetEase citing disagreement over intellectual property control. The pair subsequently sued each other.

Tension eased after Microsoft's October acquisition of Activision Blizzard, which was followed by management changes. Chinese media then reported that Microsoft and NetEase were seeking ways to re-launch 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, Wednesday's statement showed.

"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 favourite games. Over a million users requested refunds for unspent in-game credit, NetEase customer service said shortly after the games were taken offline.