Gaming giant Blizzard says it will suspend most China services

Producer of some of the best-known titles in gaming, including "World of Warcraft" and "Overwatch", Blizzard has operated in China since 2008.

But the firm said in a statement it had failed to reach an agreement with Chinese publisher Netease over an extension to their 14-year licensing agreement.

"Blizzard Entertainment, Inc. announced today that it will be suspending most Blizzard game services in mainland China," Blizzard Entertainment, a subsidiary of California-based Activision Blizzard, said.

"We will suspend new sales in the coming days and Chinese players will be receiving details of how this will work soon," it added.

Negotiations fell apart, it said, after the two sides failed to strike a deal that is "consistent with Blizzard's operating principles and commitments to players and employees". It did not share further details.

Upcoming releases for "World of Warcraft: Dragonflight", "Hearthstone: March of the Lich King", and season two of "Overwatch 2" will go ahead later this year, it added.

Netease's Hong Kong-listed shares fell more than 10 percent in the morning Thursday.

The gaming giant is expected to release its third-quarter earnings later in the day.

China -- the world's biggest market for online games - contributed at least three percent of the US firm's net revenue in 2021, according to company records.

The Chinese government has cracked down on the industry in recent years, warning children are spending too much time playing online games and hitting players with new age and playing-time restrictions. Approval of new titles has also slowed.