The cooperation between Blizzard and NetEase has not been renewed. Although both parties have issued statements declaring that the renewal has failed, the author believes that the statement may be a game means to force the other party to make concessions. The two parties are actually in a calm period of separation, and will probably renew the contract before January 23, 2023, the termination period of the authorization contract. Let's talk about this today, and why did the previous negotiations fail? Is it reliable for Blizzard to authorize other companies to operate games? What would mean a complete failure to renew the contract?

一、 Why didn't the two sides negotiate before

The renewal of the contract failed because of the confidentiality agreement, and both sides were confused. Blizzard's statement: The two parties have not reached an agreement on the renewal of the agreement that conforms to Blizzard's operating principles and commitments to players and employees. Netease's statement: Activision Blizzard's requirements are unacceptable for some key cooperation terms involving sustainable operation and the core interests of the Chinese market and players. The author's interpretation: Blizzard is asking exorbitant prices, and Netease doesn't follow. Like all other deals, the core reason for the failure of this renewal is actually one word: money.

The renewal of online games mainly talks about two things: the amount of licensing fees and the proportion of sharing are both money issues. As we have cooperated for several years in the renewal of all game operation rights, we both know how much the other party can earn. However, this does not affect that the licensors of popular games will charge exorbitant prices when renewing their contracts, which is the practice of the game industry and all content industries.

Popular games are scarce, and agent operation of popular games is a seller's market. If the operating agent is unwilling to increase the price, the licensor should replace the agent. Hot content, you don't do it, there are people queuing to do it. Only those who have personally participated in the negotiation of the renewal of popular games will feel the strength of the licensor and the helplessness of the agent operator. According to the conditions at the time of renewal, many of the contracts reviewed by the author almost do not make money by operating the agent, but work for the licensor. Of course, this is also reasonable. After all, the content for making money is created by the licensor.

So around the world, game licensors will succeed in raising prices in most cases, but why did Blizzard kick the iron plate this time? There are three reasons:

1. Blizzard will lose more when replacing agents

If Blizzard game is a gold mine, the mine is Blizzard's, and NetEase is just a miner. The failure to renew the contract is a loss of profits from selling minerals for Netease, but it means that the mineral vein is exhausted for Blizzard games, because it is difficult for players who have been out of service for a long time to return. Obviously, the loss of blizzard is greater.

In Blizzard's replacement of World of Warcraft agents, can players' user data in Netease be translated In this article, the author has already carried on the analysis. The General Administration of Press and Publication has stipulated that if the operator of an imported game is changed, a new version number shall be applied for. At present, China is in the period of online game rectification. The last issue of the version number of imported games was in June 2021, so the new version number is far away. As for the user data of Blizzard games saved by NetEase, because it contains personal information of tens of millions of Chinese users, if it is to be transmitted to Blizzard, it belongs to data exit, and it should be reported to the national network information department through the local provincial network information department for data exit security evaluation. The author estimates that this evaluation will also take a long time. Therefore, Blizzard will let its games leave the Chinese Mainland market for a long time.

2. The Jiucheng agent also failed to ease the conflict between version number and user data

Recently, some media said that Blizzard and the ninth city, the original operator of World of Warcraft, were negotiating a new deal. But even if Jiucheng operates the game, the issue of version number and user data will still perplex Blizzard. First of all, the cooperation between Jiucheng and Blizzard was more than ten years ago. According to the Notice on the Management of Mobile Game Publishing Services issued by the State Administration of Radio, Film and Television, the upgraded works and new documentaries of mobile games that have been approved for publication are regarded as new works, and the corresponding approval procedures need to be performed again according to their categories. For more than a decade, NetEase has applied for the edition numbers of five expansion films, namely, the wrath of the Lich King, the fission of the earth, the riddle of the Panda Man, the king of Draenor, and the Second Coming of the Legion, just for the upgraded version of World of Warcraft. Therefore, even if Jiucheng Agent re applies for World of Warcraft, theoretically, the content corresponding to its original version number has expired, so it should re apply for the version number.

Secondly, other Blizzard games represented by NetEase have not won the version number before. If they cooperate with Blizzard, including Hearthstone Legend, Watch Vanguard, Diablo III, Starcraft II, Warcraft III: Reproduced, and Storm Hero, they will definitely reapply for the version number. As far as user data is concerned, if the contract between Blizzard and NetEase stipulates that NetEase will hand over user data to Blizzard or its designated operator, Jiucheng can obtain user data of Blizzard games operated by NetEase after cooperation with Blizzard. However, if the contract between Blizzard and NetEase only stipulates that user data will be handed over to Blizzard, NetEase should still hand over the data to Blizzard. As mentioned above, this involves data going abroad, It will take a long time for those to be reviewed by the government.

Finally, on the official website of Jiucheng, its current main businesses are cryptocurrency and NFT. Whether it is able to operate so many Blizzard games that are famous for their sophistication and complexity is questionable.

3. Blizzard's own strength has declined and lacks new games to attract NetEase

The development trend of global games is to increase mobile games and decrease end games. However, Blizzard, as a company that started from PC games, has passed its heyday. In recent years, Blizzard has never produced World of Warcraft, a game with global dominance, and its new games under development do not have this level. If Blizzard has one or more new mobile games waiting to be sold, NetEase will be forced to renew the contract even to make a good impression on Blizzard. Because future growth is the most important thing for Internet listed companies, they cannot afford to miss the loss of future benefits. More than a decade ago, when Blizzard transferred the agency of World of Warcraft from Jiucheng to NetEase, it may have painted this cake for NetEase, but now Blizzard has lost its strength or imagination.

二、 Why do we say that the two sides are in the calm period of breaking up?

Is it still possible to recover this situation? The author believes that the possibility is great. If we regard the previous statement as an official declaration of separation, the divorce process is still in a cooling off period before the formal termination of the contract between the two parties on January 23, 2013.

The current situation will cause three losses: players cannot play the game in the national service; Netease lost its operating income; In addition to losing authorized income, Blizzard will also lose a large number of Blizzard game players. If Blizzard changes the game agent, it should be a high probability that the game will be back online after a long time. During this period, although some players will go to Blizzard's overseas service, such as the platform service, more players may be attracted to other non Blizzard games. Once they play other games, it will be very difficult for Blizzard to turn them back to their own games.

Optimistically, the two sides may reach a new agreement before the end of the year, because the news of the collapse of the talks between the two sides has affected the confidence of players. If this situation continues, the game will continue to lose blood. If both sides are rational, they will stop losing as soon as possible. Although the previous negotiations may make it difficult for both parties to survive, Microsoft, which has close relationship with both parties, can be an old uncle. Microsoft acquired Activision Blizzard in cash at the beginning of the year for $68.7 billion (the antitrust review of this transaction has not been completed yet); The game My World, a masterpiece of Microsoft Mahjong Studio, has been given to Netease agents. If Microsoft is willing to intervene, both parties are willing to make concessions in terms of licensing fees and share ratio (mainly Blizzard will make concessions). This transaction that is on the verge of breaking will revive. Maybe when I wrote this article, people from Netease and Blizzard had already negotiated in Microsoft's office.

In fact, in similar business games, there are still many examples of cooperation after breaking up. Sony has the copyright of Spider Man and Disney has the copyright of Marvel Universe. Spider Man, played by the Dutch brother, became very popular with the audience after joining Marvel Universe. Unexpectedly, shortly before the expiration of the cooperation in August 2019, the sharing between Disney and Sony broke down, and the two sides announced that they would end the cooperation , but only one month later, the tide turned around. Sony and Disney announced reconciliation , and Spider Man returned to Marvel Universe. The author has always believed that as long as such transactions have a common interest base, they are not afraid of collapse, because both parties know the bottom line of the other party, and the probability of subsequent compromise and resurrection will be high.

三、 If the renewal fails, it indicates that NetEase has dismissed the operation team

Indeed, there is a possibility that Blizzard Netease could not reach an agreement commercially and the two parties would not renew the contract. When will this possible point appear? If players pay attention to this matter, you can see when Netease will remove the operation team of Blizzard games. If the game is no longer in operation, they can no longer spend the human resource cost to maintain the operation of the game.

If the contract cannot be renewed with Blizzard finally, NetEase can downsize according to Article 41 of the Labor Contract Law: If the labor contract cannot be performed due to significant changes in the objective economic conditions based on which the labor contract was concluded, the employer shall explain the situation to the labor union or all employees 30 days in advance, listen to the opinions of the labor union or employees, and report the downsizing plan to the labor administrative department. However, in case of layoff, the employer shall also pay economic compensation to the laid-off employees according to their working years.

The majority of Blizzard games are operated by NetEase Shanghai. According to the 2021 annual report of NetEase (Shanghai) Network Co., Ltd., the company has 1358 employees. Considering that NetEase started operating Blizzard's World of Warcraft game in September 2009, employees with a longer working age should have more than 13 years. For them, the economic compensation will also reach the upper limit, which is at least equivalent to 12 months' salary, The total amount will not be small. For NetEase, the layoff will be a relatively large expense. Its listed companies may announce the cost when it occurs. At the same time, the employees involved may also send the layoff information to the social platform.

Therefore, if NetEase sends a layoff message, it will mean that the cooperation with Blizzard is really irreversible. But before that, I think we can still wait and see, or even remain optimistic about the cooperation between the two sides.