(Yicai Global) Nov. 18 -- NetEase was unable to find a way forward with Activision Blizzard as the US game developer’s stipulations on some key issues were not acceptable, the chief executive officer of the Chinese internet giant said after Blizzard announced it was pulling out of its partnership with NetEase and that most of its games would soon no longer be available on the mainland.

The negotiations with Blizzard were much more difficult than expected, and it was not possible to meet its demands on some central issues concerning sustainable operations, the China market and the core interests of players, Ding Lei said yesterday.

World of Warcraft, Hearthstone, Overwatch, Starcraft Warcraft III: Reforged, Diablo III and Heroes of the Storm are among the games that will not be available on the mainland from Jan. 23 next year, Blizzard said on Nov. 16. Top-downloaded game Diablo Immortal is not affected as it is co-developed by the two parties and thus falls under a separate agreement.

NetEase will make sure that mainland gamers get to play their favorite games until the very last minute, it said. The Hangzhou-based company will work out solutions as soon as possible on data, virtual assets and rights. It will initiate refunds and keep players informed of progress.

The termination of the China licenses will not have a material impact on NetEase’s performance, the firm said in its latest financial report released yesterday. Earnings from Blizzard were a very low percentage of the company’s profit and revenue in the first nine months as well as last year, it added.

NetEase’s revenue as an agent for other game developers, such as Santa Monica-based Blizzard and US tech giant Microsoft, accounted for 9.5 percent of total revenue last year and 9.1 percent in 2020, according to its annual financial reports.

Meanwhile the company remains highly profitable. NetEase’s profit in the three months ended Sept. 30 more than doubled from the same period last year to CNY6.7 billion (USD941.8 million), while revenue jumped 10.1 percent to CNY24.4 billion (USD3.4 billion), according to the earnings report. The vast majority of its revenue, some 76.6 percent, came from games and related value-added services.

NetEase’s other businesses have also gained positive results. In the third quarter of this year, the total revenue of NetEase Cloud Music was CNY 2.4 billion (USD 337 million), up 22.5% year on year. The total revenue of NetEase Youdao Dictionary reached CNY 1.4 billion (USD 200 million), up 35.0% year-on-year.

NetEase was among the batch of 70 gaming licenses issued by the Chinese government yesterday. So far this year, regulators have granted permits for 384 games in six separate batches.

China will step up the issuance of licenses so that the gaming industry can develop in a healthy and sustainable way, said industry insiders, including senior managers at the world’s biggest video game developer Tencent Holdings.

Editors: Shi Yi, Kim Taylor