Why the Fight Between NetEase and Activision Blizzard Matters to Esports

Credit: NetEase

Activision Blizzard didn’t have a great start to the week. First reports claim that the European Union will oppose the merger with Microsoft (when it finally publishes its official conclusions), further complicating the timeline to get the merger done before the summer.

And as we detailed yesterday, the publisher of World of Warcraft, Diablo, and Overwatch claimed that it asked its now-former Chinese distributor NetEase to give it a six-month extension as it sought out a new partner. NetEase declined, but Activision Blizzard issued a statement putting the blame for the deal squarely on it. NetEase punched back with its own venomous statement, but photos of a barren office that used to house their joint operations from last week (when Activision Blizzard claimed it asked for that extensions) shows that the bell had already been rung and it was too late—100 people had been laid off at that point.

To add insult to injury, photos from a NetEase live stream this morning showing the company dismantling the iconic “Gorehowl Axe” statue (from Warcraft) on its property really really drove the point home that the party was over. It’s a shame for fans of Blizzard Games in China because it could be months or even years before they return due to the Chinese government’s strict policy on game approvals.

More importantly, it leaves a big question mark for esports teams in the region who are part of the Overwatch League such as Chengdu Hunters, Guangzhou Charge, Shanghai Dragons (owned by NetEase 🤯 as Hongyu Chen just pointed out to me), and Hangzhou Spark. They most certainly won’t be playing any matches in home venues in China because once NetEase is out of the picture later this month the game isn’t legal (it no longer has official approval as far as we know) to be played in the region anymore. I suppose they could go to Korea and play there but that’s not exactly optimal…

The whole play by Activision Blizzard to renegotiate its distribution deal really backfired, and it seems like whoever was in charge just expected NetEase to acquiesce. They had to be thinking that, because there was just too much at stake: the game approval from the Chinese government, removing a game from a region that is vital to three OWL teams, and losing millions in revenue from some of the most rabid Blizzard fans in the world.

That’s my take on the situation, but i’d love to hear what you think. Drop a comment and share your thoughts! Happy Wednesday. – James.

This article originally appeared in The Fudge Retort newsletter.