We’ve updated this story at the end as NetEase’s name has been removed from the lawsuit. The original article follows.
If you thought the NetEase vs. Blizzard showdown couldn’t get any spicier than demolished statues and personal attacks being leaked by execs, then you are in for a dramatic surprise today as NetEase has taken its grievances to court in China.
Chinese financial outlet Sina Technology reports this morning that NetEase is suing Blizzard Entertainment in a Shanghai court for violating the companies’ license agreements. NetEase seeks 300M CN¥ ($43M US) in compensation for prepayments, deposits, unsold inventory, and consumer refunds for Blizzard’s now-sunsetted MMOs, as well as deposits for games that weren’t actually developed or finished.
Readers will recall that the abrupt dissolution of the Activision-Blizzard-NetEase partnership that governed the publishing of Blizzard’s games in China ballooned into one of the biggest MMO stories of 2022 as the companies’ failed contract negotiations led to the sunset of multiple games in China in January – including World of Warcraft.
Public rancor between the companies flared up almost immediately, as Blizzard suggested NetEase’s proposals ran contrary to its operating principles, while NetEase implied Blizzard negotiated in bad faith and blasted Blizzard for a last-minute WoW-saving proposal it said was “brash, unseemly and commercially illogical.” A NetEase exec pinned the blame on an unnamed Blizzard “jerk,” and in March The New York Times exposed the details of the falling out over supposed regulation and disclosure concerns that boiled down to long-brewing control and money disputes over Blizzard’s IPs in China under the cloud of Microsoft’s Activision-Blizzard buyout.
The final straw was apparently a negotiation between NetEase CEO William Ding and ABK CEO Bobby Kotick during which Ding suggested he could sway Chinese regulators’ approval of the Microsoft offer based on the outcome of the licensing deal, which Kotick perceived as a threat. NetEase denied that and maintains that Blizzard continues to “harass and taunt companies and regulators worldwide.” There followed ABK’s proposal that NetEase pay it $500M upfront to seal the contract, which NetEase rejected, leading to the demise of all the Blizzard games in China.
Blizzard has said it’s still seeking a new partner in China to reopen the games, but it’s hard to imagine that this lawsuit will make those efforts any easier. Similarly, NetEase is surely aware that the timing of this lawsuit is inconvenient for Activision-Blizzard, which is expected to post its Q1 2023 financial report on Thursday.
