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Activision Blizzard (ATVI) to Halt Blizzard Services in China
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Activision Blizzard recently announced that it will soon suspend the services of Blizzard entertainment from China after it failed to extend its 14-year licensing agreement with local firm NetEase (NTES - Free Report) , which expires in January 2023.
NetEase has been a developer and operator of some of the most popular mobile and PC games in markets including China and Japan and had a partnership with Blizzard for 14 years now.
Negotiations fell apart as both parties couldn’t strike a deal that was consistent with Blizzard's operating principles and commitments to players and employees.
The Chinese government too has been unsupportive of the industry in recent years, warning that children are spending too much time playing online games. It has put across new age and playing-time restrictions to curb this as well.
What Lies for Activision Blizzard Further?
China, the world's biggest market for online games, had contributed at least 3% of Activision Blizzard’s net revenues in 2021, according to company records. Its popular games like World of Warcraft, Hearthstone, Warcraft III: Reforged, Overwatch the StarCraft series, Diablo III, and Diablo Immortal had gained significant traction.
Diablo Immortal had reached the top of the download charts and ranked in the top 10 highest-grossing mobile games in China since its launch in July.
Loss of revenues from China would be a huge blow to the company. This news might also be a matter of concern for Microsoft (MSFT - Free Report) , which is set to complete the acquisition of the firm by next year.
However, the company also stated that its upcoming releases for World of Warcraft: Dragonflight, Hearthstone: March of the Lich King and season two of Overwatch 2 will go ahead later this year in all other countries as planned.
Blizzard’s Diablo series, with its fourth installment launch set for in 2023, is much awaited and is expected to grow its user base. The title will support cross-play and cross-progression across platforms and will also engage live service and provide ongoing storytelling.
Besides this, the lineup from Activision is also expected to aid the top line and offset losses from Blizzard, if any.
Activision is also set to launch Call of Duty: Warzone Mobile in 2023, which is a free-to-play battle royale mobile game with up to 120 players, allowing them to share social features like friends and chat channels. Already 20 million players have pre-registered for the game on Google Play.
Shares of Activision have gained 11.8% year to date against the Zacks Consumer Discretionary Sector, which fell 33.4%.
Activision Blizzard to Face Stiff Competition
Activision Blizzard, which currently carries a Zacks Rank #2 (Buy), faces competition from Take-Two Interactive (TTWO - Free Report) and Electronic Arts.
Take-Two recently launched Rollerdrome, a third-person action shooter. The company’s 2K and Visual Concepts also launched NBA 2K23, the next offering from its industry-leading NBA series. The company expects fiscal 2023 revenues to jump 73.3% year over year.
EA has released a strong slate of games for its players. Its year-end lineup includes the racing game Need For Speed Unbound (Dec 2), while 2023 awaits the horror genre Dead Space (Jan 27) and the action and adventure game, Wild Hearts (Feb 17).
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Activision Blizzard (ATVI) to Halt Blizzard Services in China
Activision Blizzard recently announced that it will soon suspend the services of Blizzard entertainment from China after it failed to extend its 14-year licensing agreement with local firm NetEase (NTES - Free Report) , which expires in January 2023.
NetEase has been a developer and operator of some of the most popular mobile and PC games in markets including China and Japan and had a partnership with Blizzard for 14 years now.
Negotiations fell apart as both parties couldn’t strike a deal that was consistent with Blizzard's operating principles and commitments to players and employees.
The Chinese government too has been unsupportive of the industry in recent years, warning that children are spending too much time playing online games. It has put across new age and playing-time restrictions to curb this as well.
What Lies for Activision Blizzard Further?
China, the world's biggest market for online games, had contributed at least 3% of Activision Blizzard’s net revenues in 2021, according to company records. Its popular games like World of Warcraft, Hearthstone, Warcraft III: Reforged, Overwatch the StarCraft series, Diablo III, and Diablo Immortal had gained significant traction.
Diablo Immortal had reached the top of the download charts and ranked in the top 10 highest-grossing mobile games in China since its launch in July.
Loss of revenues from China would be a huge blow to the company. This news might also be a matter of concern for Microsoft (MSFT - Free Report) , which is set to complete the acquisition of the firm by next year.
Activision Blizzard, Inc Price and Consensus
Activision Blizzard, Inc price-consensus-chart | Activision Blizzard, Inc Quote
However, the company also stated that its upcoming releases for World of Warcraft: Dragonflight, Hearthstone: March of the Lich King and season two of Overwatch 2 will go ahead later this year in all other countries as planned.
Blizzard’s Diablo series, with its fourth installment launch set for in 2023, is much awaited and is expected to grow its user base. The title will support cross-play and cross-progression across platforms and will also engage live service and provide ongoing storytelling.
Besides this, the lineup from Activision is also expected to aid the top line and offset losses from Blizzard, if any.
Activision is also set to launch Call of Duty: Warzone Mobile in 2023, which is a free-to-play battle royale mobile game with up to 120 players, allowing them to share social features like friends and chat channels. Already 20 million players have pre-registered for the game on Google Play.
Shares of Activision have gained 11.8% year to date against the Zacks Consumer Discretionary Sector, which fell 33.4%.
Activision Blizzard to Face Stiff Competition
Activision Blizzard, which currently carries a Zacks Rank #2 (Buy), faces competition from Take-Two Interactive (TTWO - Free Report) and Electronic Arts.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Take-Two recently launched Rollerdrome, a third-person action shooter. The company’s 2K and Visual Concepts also launched NBA 2K23, the next offering from its industry-leading NBA series. The company expects fiscal 2023 revenues to jump 73.3% year over year.
EA has released a strong slate of games for its players. Its year-end lineup includes the racing game Need For Speed Unbound (Dec 2), while 2023 awaits the horror genre Dead Space (Jan 27) and the action and adventure game, Wild Hearts (Feb 17).