NetEase Sues Blizzard Entertainment In China Over Failed Licensing Agreement

NetEase and Blizzard’s feud has gone beyond Blizzard Entertainment for violating their licensing agreements. In a Shanghai court, NetEase is seeking a whopping $43 million in compensation for prepayments, unsold inventory, and consumer refunds related to Blizzard's now-defunct MMOs. They're also going after deposits for games that never actually materialized.

The bad blood between the two companies started last year when they failed to renegotiate their partnership deal. This led to the sunset of multiple games in China, including the ever-popular World of Warcraft. Public rancor between the companies quickly escalated, with both sides pointing fingers and casting blame.

Blizzard accused NetEase of proposing solutions that went against its operating principles, while NetEase suggested that Blizzard was negotiating in bad faith. NetEase also accused Blizzard of harassing and taunting companies and regulators worldwide. Things came to a head when NetEase CEO William Ding suggested that he could sway Chinese regulators' approval of Microsoft's buyout of Activision-Blizzard based on the outcome of the licensing deal. Blizzard saw this as a threat, and things went downhill from there.

Blizzard is still seeking a new partner in China to reopen its games, but with this lawsuit in the mix, things are looking grim. And it's not just bad news for Blizzard; NetEase's timing is also inconvenient for Activision-Blizzard, which is expected to post its Q1 2023 financial report on Thursday. Buckle up, folks, because this is going to be a bumpy ride.