NetEase shares rise on report that Blizzard China partnership is back

Investing.com-- Shares of Chinese videogame company NetEase Inc (HK:9999) rose on Tuesday amid local media reports that the company was close to resuming its partnership with Blizzard Entertainment, bringing the latter’s games back into China.

Hong Kong shares of Netease rose as much as 5% to HK165.80, outpacing a 0.6% increase in the Hang Seng index. 

Chinese media reports showed that Blizzard Entertainment, which was taken over by Microsoft Corporation (NASDAQ:MSFT) in late-2023, was in talks to restart its Chinese servers by as soon as April 10, resuming its partnership with Netease after a more than year-long break. 

Blizzard and Netease, which had initially signed a partnership in 2008 under which the latter published Blizzard’s games in China, had failed to reach an agreement to extend the deal in 2022, resulting in Chinese gamers losing access to Blizzard’s games in early-2023.

But a slew of recent reports showed that the two were back in talks to repair relations and resume their earlier partnership, which will bring franchises including World Of Warcraft, Hearthstone, Starcraft, Overwatch and Diablo back into Chinese markets. 

Posts on Chinese social media also showed recent meetings between Netease and Blizzard executives.

Netease is expected to clock higher revenues from publishing Blizzard’s games, which are wildly popular in China. The firm also recently partnered with Walt Disney Company's (NYSE:DIS) Marvel Games to develop a new super hero shooter for release later in 2024, called Marvel Rivals. 

China represents a major player base for Blizzard, which has been somewhat struggling with its North American and U.S. markets amid growing ire over the firm’s handling of its major franchises, specifically Overwatch and Diablo. 

Blizzard was hit with a series of layoffs after the Microsoft takeover, as part of a broader headcount reduction in Microsoft’s gaming business. 

The Microsoft takeover also likely played a part in Blizzard’s return to China, after long-time Activision-Blizzard CEO Bobby Kotick left the firm in end-2023. Microsoft Gaming CEO Phil Spencer now oversees the business.