Blizzard break-up strikes a blow to NetEase’s overseas expansion

NetEase CFO Charles Yang Zhaoxuan has stated that the company’s recent break-up with Blizzard has impacted the company’s long term plans, and as such the company doesn’t expect to release any new games through its overseas studios until at least 2025, reports the South China Morning Post.

NetEase significantly stepped up overseas expansion in 2022 as the Chinese industry faced a number of regulatory challenges with their home country, including new restrictions on playtime and a massive slowdown on licensing. This included the foundation of several new studios, including Nagoshi Studio and Jackalope Games, as well as the acquisition of French developer Quantic Dream.

Slow and steady

NetEase CEO WIlliam Ding stated in May that NetEase hopes that overseas revenue will account for 40-50% of the total, but declined to offer a timeframe according to the South China Morning Post. Despite its success, NetEase ranked only sixth among Chinese companies in terms of overseas revenue in 2022, meanwhile Tencent’s international revenue accounted for almost 30% of the total revenue for Q3.

Lens Company Research founder Kuang Yuqing believes that, in the future, NetEase will need to rely on the overseas market to fuel growth, stating that “The proportion of overseas gaming revenue is [currently] too small, so even if new games bring explosive growth… it may not be a big [enough] breakthrough.”

Despite the reported delay, NetEase still has a slate of upcoming releases, such as a mobile version of the PC game Justice and the worldwide release of Harry Potter: Magic Awakened.

iiMedia Research CEO Zhang Yi states that a 2025 date for new releases fall in line with industry standards should the studios be working on wide releases, saying that “it is normal for a game targeting the global market to spend at least two years in development.” However, development duration is no guarantee of success and NetEase will also be considering the operational capabilities of its teams, content preferences among gamers, and the competitive status of the market.

We listed NetEase as the top mobile game maker of 2022.


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