Activision Blizzard says NetEase dismisses proposal to extend ties

Activision Blizzard says NetEase dismisses proposal to extend ties
© Reuters. Copies of World of Warcraft: Mists of Pandaria video game published by Activision Blizzard, owned by Vivendi, are displayed in a shop in Rome, October 16, 2012. REUTERS/Tony Gentile

By Josh Ye

HONG KONG (Reuters) -Activision Blizzard Inc, the U.S. video game developer behind hit franchise Warcraft, said on Tuesday its Chinese publisher NetEase (NASDAQ:NTES) Inc had turned down a proposal to extend their long-time partnership for six months as it looks for a new partner.

In a statement on microblogging site Weibo (NASDAQ:WB), the U.S. firm’s subsidiary Blizzard China said it contacted NetEase last week with a proposal to extend their partnership and that the Hangzhou-based company had declined.

“It is a pity that NetEase is not willing to extend services of our game for another six months on the basis of existing terms as we look for a new partner,” Blizzard China said.

Blizzard China said its game services will end on Jan. 23.

NetEase declined to comment.

The development comes after Activision Blizzard (NASDAQ:ATVI) in November said it would end its 14-year partnership with NetEase, the second-largest gaming company in China. The announcement sent shockwaves across the industry as the partnership was widely seen as one of the most lucrative in video games.

NetEase, in a November earnings briefing, said it had made the utmost effort to negotiate but found the proposed terms requested by the U.S. company unacceptable.

NetEase then said it would have to discontinue Activision Blizzard’s game service in China, the world’s biggest gaming market, on Jan. 23.

With the demise of their partnership, Activision Blizzard was left without a Chinese publisher and said in December it was in talks with potential partners.

Unlike other countries, foreign gaming companies typically need a Chinese publisher before being able to release games in China.

NetEase rose to become a gaming giant partly by publishing Activision Blizzard’s games in China. The company has since accelerated its own game development capability, with in-house games now accounting for more than 60% of revenue.