What can compound Netease Blizzard do to save the hearts of gamers？

Wen | Rustless Bowl Carya cathayensis

"It doesn’t make sense, the game is old, we are not young, and it doesn’t make sense to come back."

After being away from China players for one year and two months, when Blizzard and Netease finally heard the news of "remarriage", the emotions of gamers seemed very complicated.

In the morning of April 10th, Blizzard Entertainment, Microsoft Games and Netease jointly announced that Blizzard’s games will return to the Chinese mainland market one after another this year.

Previously, a series of obscene operations from Bobby Kotick, the former CEO of Activision Blizzard, almost destroyed the friendship accumulated by the two companies based on decades of stable business cooperation. Netease publicly broadcast the demolition of the Blizzard Game Sculpture in the park, which was once regarded as a sign of "kindness and righteousness" between the two sides.

Fortunately, with the departure of Kaudick, the crux that prevented the two sides from getting back together no longer exists. In the days to come, Blizzard family barrel games will be launched one after another, and new Blizzard sculptures will be re-established in Netease Park. All the past disagreements will seem to have never happened, and everyone will be happy, except gamers who have been repeatedly pulled and tortured because of the suspension of the relationship between the two sides.

Although due to specific "technical problems", the national service is still unable to meet with you in the short term, but the shocking degree of this news still triggered a wide discussion on social media.

On the one hand, for countless players who struggled with the "periodic law of national service return" and all kinds of gossip in the past year, the return of national service has finally become a certain fact; On the other hand, for those players who were severely backstab in the storm of national service suspension, they may need a step to forgive blizzard and regain their youthful memories.

The "National Service Historical Periodic Law" in the World of Warcraft Players Source: Network

Repairing a relationship is always more difficult than destroying it. No matter for Blizzard or players, it may take more energy than expected to restore mutual trust and build a new friendship.

1. After breaking up for one year, both sides have a "good life".

Netease and Blizzard’s "remarriage" is a secret that has long been "publicized in advance".

According to 36Kr, Netease and Blizzard actually signed a cooperation agreement as early as this year’s Spring Festival. According to the game media "Jingxin", at the "Game Spring Festival Gala" GDC in mid-March this year, it was heard that Netease executives Ding Lei and Hu Zhipeng discussed the return of Blizzard’s national costume with Microsoft executives at the Westin Hotel, and a photo circulated among people also confirmed the above conjecture.

Netease executives discuss cooperation with Microsoft. Source: @ 中中中中中

This photo invisibly conveys the difficulty of "reconnecting" the national service-this is not a departmental work, but a "big project" that needs the consensus of the management of the three parties and is promoted from top to bottom.

From the uncompromising "tearing" to the "compounding" again now, the boots have finally landed, and the outside world is more concerned about how Netease and Blizzard have been doing since they broke up for more than a year.

A basic fact is that when the two parties broke up, Netease made more contributions to Blizzard than Blizzard did to Netease. For Blizzard, the China market was a "net profit without loss" business.

Activision Blizzard’s financial report shows that the net income of agency games signed with Netease accounts for 3% of the total revenue in 2021, which is 264 million US dollars. Blizzard Entertainment, Activision and King together form Activision Blizzard. Since 19.6% of Activision Blizzard’s revenue comes from Blizzard Entertainment, Netease’s revenue accounts for 14.5% of Blizzard Entertainment.

In other words, Netease’s 3% contribution actually propped up 15% of Blizzard Entertainment’s revenue.

On the other hand, Netease, according to insiders, the income from acting as an agent for Blizzard games accounts for a very small proportion of Netease’s total income. Netease also said at the financial report analysis meeting that the net income and net profit contribution of these authorized Blizzard games in 2021 and the first nine months of 2022 accounted for a low percentage of Netease’s total net income and net profit, which was only a low single digit, and the expiration would not have a significant impact on Netease’s financial performance.

Facts have proved that after the divorce, Netease and Blizzard actually had a "good life".

Netease’s latest annual report shows that its net income from games and related value-added services reached 81.6 billion yuan, mainly due to the growth of mobile game revenue, among which the biggest heroes were Egg Party and Going Against the Water.

The Egg Party, regarded by Ding Lei as "at least 10 years", has more than 500 million registered users, with a DAU peak of 40 million, which is also the highest DAU game in Netease’s history.

On the other hand, Netease’s masterpiece, which is also called "Prince Netease", is highly expected. Netease not only buys in large quantities, but also spares no effort in marketing.

In this cooperation, Blizzard, which once "won", experienced an initial decline in revenue and was "incorporated" by Microsoft for $68.7 billion, and its life was not as bad as expected.

According to the latest financial report before Activision Blizzard was acquired by Microsoft, in the second quarter of 2023, the net sales of Activision Blizzard increased by 50% year-on-year, and the GAAP operating profit and segment operating income increased by more than 70% year-on-year.

Among them, mainly due to the popularity of Diablo IV, Blizzard Entertainment achieved a quarterly net sales of $1 billion for the first time, setting a record for division revenue.

After being acquired by Microsoft, Microsoft also named the contribution of the game department in its second quarter financial report of fiscal year 2024. The revenue of Microsoft Xbox content and service business increased by 61% in this quarter, which became the new engine of Microsoft’s growth. Microsoft also pointed out in the financial report that after the merger of Activision Blizzard, it brought more than $2 billion in net income to Microsoft.

2, a "two-way trip" to get back together.

Although relying on the above-mentioned phenomenal product bonus, both parties have had a good time in the short time of "breaking up", this does not mean that the above-mentioned accidental opportunities can last forever.

In the long run, the business pattern of Blizzard and Netease’s "two benefits" has not changed.

After understanding the business layout and strategic demands of both parties, it is not difficult to find that the re-cooperation between the two parties can be described as natural. On the contrary, it is a "lose-lose" situation in which the fish die and the net break, which is puzzling.

Although slogan, which used to be a "masterpiece" produced by Blizzard, has become a joke, it really doesn’t matter to Netease’s current game business layout.

In contrast, the IP value and brand value accumulated by Blizzard for a long time are the core that Netease really cares about.

After all, although it is difficult for Blizzard to develop such phenomenal products as Watch the Pioneer, in the past year or so, it is enough to prove that Netease has no shortage of new works of "Qi Fei in Sound Volume" from "Egg Party" to "Go Against the Water" veteran clothes, and then to "Go Against the Water" and "Never Robbed" mobile games.

"Egg Party" has more than 40 million DAU during the Spring Festival. Source: Official

At the present stage when the two sides officially announced their remarriage, Netease spent one billion yuan, relying on Jin Yong’s classic IP to build the "The Condor" mobile game, and also won 14.5 million reservations in one fell swoop in the public beta stage.

It is no exaggeration to say that at this stage, as long as there is a certain degree of IP traffic blessing, Netease’s mature ability in marketing, development, art design and operation has the possibility of "pushing fire" to a new tour in a short time.

Corresponding to the popularity of the traffic side, the "reservation" represented by "mature IP" and "stable players" is what Netease urgently needs at present.

Previously, the popularity of "Egg Party" has made Netease suffer from the doubts of "inducing underage consumption" and "performance depends entirely on the post-00 s". A series of new works have made Netease’s negative impression of "circling money" widely circulated. The brand reputation accumulated by Blizzard for many years, and the group of older players brought by Blizzard games, can just help in the snow and neutralize the above unfavorable factors.

In this context, the contribution of Blizzard’s family barrels in the revenue link has become a negligible addition.

On the other hand, for Activision Blizzard and Microsoft, cooperation with Netease is also a win-win choice.

For Blizzard, the brand’s ability to develop new IP needs to be improved after the frequent layoffs and departmental transfers of management. Projects such as Odyssey, whose development cycle starts in ten years, have been seriously "acclimatized" with the current game market trend. The popularity of Diablo IV also explains that at the present stage, the possibility of blizzard business growth is basically concentrated on the development of the sequel, and on the whole, what this model needs most is stable and loyal old players.

From this point of view, although the total revenue generated by National Service is not outstanding due to Netease’s relatively conservative pricing strategy at the operating end, the huge and loyal player base corresponding to the China market is an indispensable basic disk for Blizzard.

For Microsoft on the other side, the entry of Netease games into xbox is also expected to further enhance the overall competitiveness of Microsoft’s game business and finally achieve the effect of "1+1+1>3".

The president of Xbox mentioned in a recent email: "We are integrating Activision Blizzard King’s works into our service. We have introduced Diablo IV into Game Pass, and Xbox will soon become the first platform for D4 players."

Blizzard Hot IP "Diablo 4" Source: Official

Perhaps it can be understood that from breaking up to getting back together, it is actually a game in which Netease, Microsoft and Blizzard "get what they want". There is no such thing as "who licks who", but they need each other, and cooperation is the icing on the cake.

3. Who will pay for the loss of the player?

Understanding this level, the breakdown of the previous relationship between the two sides is even more "child’s play" and "unacceptable".

After all, the lockout that has plagued China players for more than a year is not a "natural disaster" and a conventional "conflict of interests", but an own goal caused by a pure "man-made disaster".

Judging from the news from all sides, the root cause of this oolong is the "going alone" of former CEO Bobby Kodick.

Bobby Codick has left his job. He has worked in Activision Blizzard for 32 years. Source: X.

More and more information revealed that the CEO, who has been in charge of Activision for 32 years, has been a "mixed reputation" for a long time, and played a very "selfish" and "short-sighted" role in putting pressure on Netease, which led to the breakdown of cooperation between the two parties.

Many people in the industry also said that because Microsoft’s acquisition of Activision Blizzard was at the end, the subsequent management restructuring plan also made CEO Caudick face the end of his career. Under this background, Caudick chose to "pressure Netease". In his view, it may be "three things at a time"-pressing Netease to succeed will make the financial report data look better; If it fails, the "mess" can also be left to the next management; In any case, he will personally gain the prestige of the political and business circles because of his tough attitude towards Chinese enterprises.

However, from the "separation" between Netease and Blizzard, the industry realized that how many people needed to make up for and pay for the bad mistakes made by a CEO.

But on this basis, another problem also followed:

"Why can this executive with poor reputation sit firmly in the position of CEO for 32 years?"

The answer is not surprising. Behind the accusation that unfair contracts were used to annex independent studios, layoffs drove away elders and the value of IP was overdrawn, the economic benefits that Kodick brought to the company’s board of directors and shareholders were real.

It is precisely because of this reason that, half a year after the total destruction of the China market, Kodik was still re-elected at the shareholders’ meeting with 96% of the votes. Even after Microsoft acquired Blizzard and was forced to quit the management, Kaudick himself still received the "golden parachute" resignation subsidy from Microsoft. Counting his own equity, he had as much as 3 billion wealth, which made the manager who deeply hurt the feelings of players and employees look like he was not "swept out of the house" at all, but "gloriously retired".

This has undoubtedly created a dangerous precedent, which shows that the game industry does not need high-sounding words such as enthusiasm and ideals. As long as it can make money, it can succeed even if it does not respect creators and players.

From this point of view, Blizzard’s arrogance and the loss of China players did not come from Codick, but from the investors and the board of directors who acquiesced in Codick’s actions. They were the real source of hurting players’ feelings.

As long as the above-mentioned short-sighted interests still exist, it may be only a matter of time before the game industry gives birth to the next "Kodik" and brews the next national service lockout, which is obviously not a simple "returning to the big gift package".

After all, going around for a year, all parties seem to have a bright future, and the "players" who are most affected may be exiled. As an old player said, "I forgot my Battle.net password, and the secret protection order was deleted. You just came back now?"