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Blizzard Entertainment renews China deal amid faltering user growth

When Activision Blizzard (ATVI) partnered with China-based NetEase (NTES) more than a decade ago, the main attraction was the growing youth population of the Asian country. Encouraged by the overwhelming response to its popular video games, Activision’s subsidiary Blizzard Entertainment is reinforcing its presence in the fast-growing Chinese market.

In a move aimed at strengthening its customer base, amid concerns over the progressive decline in the number of monthly active users, the Irvine, California-based video game developer this week extended the partnership with NetEase. Now, the successful association between two of the world’s largest providers of interactive entertainment will continue until 2023. The renewed agreement includes popular titles like Overwatch, World of Warcraft and Hearthstone, in addition to the Diablo series.

In a move aimed at strengthening its customer base, Blizzard Entertainment extended its existing partnership with NetEase

NetEase has played a crucial role in helping Blizzard expand in the overseas markets and to grow its footprint in China, where the local administration often put foreign game developers under scrutiny and even imposed ban on their titles, citing ethical reasons. The companies expect the revamped collaboration would help them tackle regulatory hassles and competition from local game developers.

Blizzard’s strategy of taking the China route for regaining the lost strength is currently followed by many American tech companies, and in most cases, the idea is to overcome the negative impact of the trade tensions. Activision is badly in need of a stimulus after its market value declined by a quarter over the past twelve months.

Tencent and Netease pops up as China reinstates gaming approvals

The gaming giant had a relatively unimpressive start to 2019, marked by the departure of some key executives. On the heels of Activision’s chief financial officer Spencer Neumann stepping down for unspecified reasons earlier this month, CFO of Blizzard Entertainment Amrita Ahuja left the company this week to join Square (SQ). While last year’s best-seller Call of Duty remains a morale booster, investors will be looking for more good news from the company this year.

Activision shares, which entered a downward spiral after peaking in October last year, started gaining momentum this month. After closing the last session higher, the stock traded lower Thursday. NetEase has been strengthening its position in the Nasdaq Stock Market since the beginning of the year, after the recent lull. The stock closed Wednesday’s trading up 6.6%.

 

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