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Activision Blizzard and NetEase Extend their China Deal

Zacks Equity Research
Updated

Blizzard Entertainment, Inc., a unit of Activision Blizzard Inc ATVI, and NetEase Inc NTES have extended their 10-year China operations deal to 2020. The two companies had first signed an agreement in 2008, per which NetEase gained licensing rights of Blizzard’s titles StarCraft II and Battle.net platform in mainland China.

Per the new terms, in addition to StarCraft, NetEase will be distributing Blizzard Entertainment’s other games such as World of Warcraft, Diablo III, Hearthstone, Heroes of the Storm, and the recently released Overwatch as well as the new content released for these games during the period in China.

As per Blizzard CEO, “NetEase has been a great partner for many years now, and we've always appreciated their hard work and dedication to providing the best experiences for our players in China. We look forward to continuing to work closely with them on delivering even more great content in the years ahead."

In 2015, Activision partnered with Tencent Holdings to bring its extremely popular franchise, Call of Duty to the Chinese markets. China is one the biggest video game markets but the government’s tight regulations have made it very difficult to penetrate in this market. However, partnerships with local companies like Tencent and NetEase have made it easier to crack this market.

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ACTIVISION BLZD Price

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Tencent is one of China’s largest media companies. It owns a very popular messaging service WeChat as well as QQ Instant Messenger. NetEase is another leading Internet technology company and operates some of the country’s extremely popular e-mail services, online PC/mobile games, and e-commerce platform. 

At present, Activision carries a Zacks Rank #2 (Buy). Better-ranked stocks in the tech space include LinkedIn LNKD and NetApp, Inc. NTAP. Both sport a Zacks Rank#1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NetApp and LinkedIn reported an average positive earnings surprise of 14.52% and 115.18%, respectively in the trailing four quarters.

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