NetEase Quashes Talk of Chinese Gaming Approval Suspensions

(Bloomberg) -- NetEase Inc. dismissed reports China is holding up gaming approvals as it untangles a huge backlog, saying the company is closing in on the release of Diablo Immortal for the world's top gaming market.

Chief Financial Officer Yang Zhaoxuan told analysts on a conference call that select regulatory agencies are tweaking the process through which developers seek approval to make money off titles, but that didn't equate to a hold-up. The company is preparing for the launch of Activision Blizzard Inc.'s hotly anticipated hack-and-slash title in China.

The global gaming industry remains nervous about Beijing intervention after regulators slapped a 10-month freeze on licenses in 2018 to combat addiction, wiping out hundreds of billions of dollars in market value in the process. This week, Reuters reported the main industry regulator had asked provincial-level authorities to stop sending up game applications while it works through a backlog of thousands of titles, an arbitrary move that could have further held up launches.

“Some provincial and local regulators have modified the format of material submissions but we do not interpret that as a shutdown of new game approvals,” Yang said.

NetEase and Activision will need a stamp of approval to distribute in China the latest iteration of a Diablo franchise that helped bring online multiplayer games into the mainstream. Yang said Diablo Immortal, which it's developing with Activision, is “pretty much ready” for release despite only being announced in November, though he deferred to the U.S. company on its timetable.

“From a co-developer's perspective the game development is pretty much ready,” he said of the title that is slated to be released this year. “As to the exact launch timetable, I would encourage the market to direct their questions directly to Activision Blizzard.”

An on-track launch for Diablo Immortal would be a rare spot of good news for one of the world's biggest games makers, which announced plans to lay off hundreds of workers, reported flat or declining growth in marquee titles including Overwatch and has lost a bevy of senior managers.

The U.S. company has shed more than 38 percent of its market value over the past 12 months. Selling accelerated this month on concerns the company has too few titles in the pipeline, after sales of the latest Call of Duty game came in below expectations and the publisher walked away from its Destiny franchise.

To contact Bloomberg News staff for this story: David Ramli in Beijing at dramli1@bloomberg.net;Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan

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With assistance from Bloomberg