NetEase Files Lawsuit Against Blizzard Entertainment Following Termination of China Licensing Deal
NetEase seeks $43.5 million in damages and compensation for discontinued games and services, unsold merchandise, and unequal provisions in licensing agreements.
Chinese gaming giant NetEase has reportedly filed a lawsuit against Blizzard Entertainment after their long-standing China licensing deal came to an end earlier this year. The partnership, which began in 2008, saw Activision Blizzard’s games pulled from the Chinese market in January, leaving local players unable to access popular titles like World of Warcraft, Hearthstone, and Overwatch.
According to the Chinese publication Sina Technology (via WoWhead), NetEase is seeking ¥300 million Yuan (approximately $43.5 million USD) to cover refunds for discontinued games and services. The company also demands compensation for unsold merchandise inventory, deposits on undeveloped games, and “unequal provisions favoring Blizzard Entertainment” in the licensing agreements between the two companies.
Sina Technology has learned that Shanghai NetEase Network Technology Development Co., Ltd. recently filed a lawsuit in Shanghai against Blizzard Entertainment Co., Ltd. for violating a series of license agreements, demanding the refund of 300 million in arrears. This amount includes refunds for discontinued games such as “World of Warcraft” that NetEase has paid in full, prepayments for unsold game inventory, and prepaid deposits for several undeveloped games. The case also involved the related agreements of “World of Warcraft” and other national service agency games, which contained a number of unequal clauses that favored Blizzard’s unilateral rights and interests. There was huge controversy over the legality and enforceability of the relevant clauses.
The situation between NetEase and Blizzard has been tense since the partnership’s termination. In a symbolic gesture, NetEase tore down a World of Warcraft statue outside its headquarters just days before Blizzard’s games went offline in China. The demolition was even streamed via one of NetEase’s official game channels.
The 14-year partnership ended abruptly after negotiations to renew their long-term licensing agreement broke down. The cessation of all Blizzard games and services in the region sparked a lengthy back-and-forth between the two companies. Activision downplayed the impact in their quarterly financial reports, while NetEase promised refunds and pledged to continue negotiations on behalf of their players.