Blizzard's return to China: A shot in the arm or a forgotten love?

Millions of Chinese World of Warcraft (WoW) players spent the past year on a rollercoaster. Rumors of Blizzard's return sent shivers of excitement, only to be dashed by disappointment.  Exhausted by the cycle, many greeted the April 9 news of a new deal between Blizzard and its former Chinese operator, NetEase, with numbness. Only the official confirmation on April 10 sparked real joy and relief.

But the jubilant fans weren't the only ones celebrating. Many, like Huang "XiaoSe" Xudong, a prominent Starcraft promoter, saw a return to normalcy. His symbolic act of distributing candies dressed as the god of wealth at NetEase headquarters highlighted the economic significance of Blizzard's return.

A roadblock removed

Early 2023 saw the termination of Blizzard games in China, including WoW, Hearthstone, Overwatch 2 and Diablo 3. The cause, according to China Media Group, was a breakdown in contract negotiations. Allegedly, Blizzard, led by former CEO Bobby Kotick, demanded a higher profit share, increased game prices, and a hefty upfront payment – all to appease investors. NetEase CEO Ding Lei deemed these demands unreasonable.

Microsoft's acquisition of Blizzard's parent, Activision Blizzard, in October 2023 proved to be a turning point. The Xbox maker's influence on Blizzard's decisions likely played a role in the renewed partnership. While details remain undisclosed, a separate deal between Microsoft and NetEase to promote NetEase games on Xbox could be another factor in NetEase's return to the table.

An uncertain future

Despite the excitement, Blizzard's re-entry might hold less weight than anticipated. NetEase's video game revenue in 2023 exceeded 81 billion yuan ($11 billion), with Blizzard games contributing only about 2 billion yuan in 2022. Similarly, Activision Blizzard reported only 3 percent of its 2021 revenue coming from China.

However, collaboration on mobile ports of established Blizzard titles presents a potential new revenue stream. The Diablo Immortal mobile port, co-developed with NetEase, achieved the franchise's "biggest launch" with over 10 million downloads in a week, generating over $100 million in its first eight weeks. This success dwarfs Blizzard's own mobile effort, Warcraft Rumble, which saw much lower revenue.

Chinese Blizzard players have historically expressed frustration with the company's perceived arrogance. A December 2023-January 2024 iFeng.com survey found only 10 percent of 20,000 players excited about a return, with the rest indifferent or even hostile. However, this doesn't negate the over 2 million players who logged into their accounts on the new Blizzard.cn website by April 10.