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 World Of Warcraft  China Hits Snags Again In Gov Power Struggle
World Of Warcraft China Hits Snags Again In Gov Power Struggle
November 3, 2009 | By Leigh Alexander

November 3, 2009 | By Leigh Alexander
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    9 comments
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It's not all green lights for World of Warcraft operations in China after all. Regulators have ordered new operator NetEase to halt Blizzard's MMO and stop allowing new accounts, claiming "gross violations" of rules -- and highlighting a rift between two different government groups in the region.

The transfer of WoW's Chinese operations from The9 to NetEase meant two months' downtime and a long closed beta for the game during the past summer, as it underwent a new round of regulatory approvals and content edits. China's Ministry of Culture approved the game's relaunch in September, having taken over some of the relevant regulatory responsibilities.

But many regulatory responsibilities are still the domain of China's General Administration of Press and Publication, which has now halted NetEase's application to run the game and demanded it cease WoW operations. The conflict appears to be part of an ongoing power struggle between GAPP and the Ministry of Culture over who controls online content. The GAPP has reportedly been displeased that the game's relaunch was approved without its input.

Analysts told Reuters that Chinese regulators have become increasingly concerned over "undesirable content" in online games. Among the edits made to WoW to allow its launch in China were the replacement of bone piles with sandbags, and a color change of enemy blood from red to a vague black mist.

The lack of specific age ratings for games in the country makes showing bones or the undead a gray area -- especially in light of a Chinese media controversy that occurred over a WoW subway advertisement that included undead characters.

The Chinese government is also cracking down in particular on foreign investments in its burgeoning online game industry, which is expected to grow 30 to 40 percent to $4 billion this year. GAPP has stated that foreign companies "cannot control or participate in domestic game-operating businesses indirectly through another investment company, signed agreements or by supplying technical support."

GAPP has also said that "foreign companies are neither allowed to covertly control or be involved in domestic gaming operations by means of joint networks for user registration, account supervision or game card systems." Such a declaration could pose a major threat not only to the future of NetEase's WoW partnership with Blizzard, but to the aims of numerous Western companies aiming to operate their games in China's high-growth online industry.

Conflicts over online games are unlikely to affect the existing game operations of other major companies in China, such as Tencent and Shanda, because they're believed to already be in compliance with regulations.

In an official statement, NetEase claims it's seen the GAPP's website statement of notification that it's returning NetEase's approval application, and its suspension instructions, but claims it's yet to receive official notification and will query the request to a higher level.

"GAPP also notes in its statement that it is evaluating whether to impose administrative penalties on Shanghai EaseNet," says the company's statement. "As of the time of this press release, neither NetEase nor Shanghai EaseNet has been officially notified of GAPP's determination."

"NetEase and Shanghai EaseNet believe that they are in full compliance with applicable PRC laws and are currently seeking clarification from the relevant governmental authorities regarding this statement by GAPP. NetEase will provide further updates on the statement by GAPP as appropriate."

[UPDATE: The Chinese Ministry Of Culture has held a press conference [Chinese language link] disputing GAPP's statements, following the latest developments in the saga.

The Ministry Of Culture is claiming that GAPP has violated a higher-level State Council provision on the approval process for online games. It appears that a ruling by the State Council at some point in the future will decide the controversy.]


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Comments


Jesse Rapczak
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Unfortunately what's going to happen is the Chinese government will ban Blizzard from operating in the country and then host their own municipal WoW servers to rake in all the profit. "All of this has happened before and all of it will happen again."

Roberto Alfonso
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Let's remember there are already pretty huge MMORPGs there, like ZT Online. However, Blizzard wouldn't like losing over half their player base again.

James Smith
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I'm not going to quote a figure that I'm not 100% sure on, but in reality this has little to no effect on blizzard.



So little of the WoW revenue comes from china that they probably couldnt care less.



However, 4mil angry chinese people once again really cant bode all that well.

Sean Parton
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@Roberto Alfonso: Not even remotely half of their userbase is directly affected by this. From a Gamasutra article from September 21, 2009: http://www.gamasutra.com/php-bin/news_index.php?story=25337



"Close to half of World of Warcraft's 11.5 million users are Chinese -- but analysts such as Lazard's Colin Sebastian have estimated that, due to the Chinese business model and licensing structure, the region accounts for just 6 percent of WoW revenues."



So yes, not a definite statistic, but if the above estimate is even remotely close, this is more of an annoyance to Blizzard then an earth-shattering problem.

Benjamin Solheim
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Sounds to me like the minister in charge of GAPP wanted a kick back and did not get one so they threatening "to impose administrative penalties", unless they get one... No offense to those stuck with a corrupt dictatorship, but this sounds like business as usual.



"GAPP also notes in its statement that it is evaluating whether to impose administrative penalties on Shanghai EaseNet," says the company's statement. "As of the time of this press release, neither NetEase nor Shanghai EaseNet has been officially notified of GAPP's determination."

Roberto Alfonso
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@Sean, I was explicitly speaking about player base as a bragging right, not as revenue. Blizzard likes to boast their growing userbase every time they hit a milestone (the latest was 11.5m). It makes investors think the game continues to expand, and that revenue will increase. Having the whole China playerbase (no matter how little revenue it generates) deleted means no more press releases about it. In marketing, it is all about what you look like, and not what you really are.

Hua Chen
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James, not sure how you came to the conclusion "So little of the WoW revenue comes from china that they probably couldnt care less". The fast is that in China you need to pay in minutes to play WOW, not like here $15/month. There are over 4 million WOW players in China, and on average one player would pay at least 60 RMB/month (around $10) for it. So now you wanna do the math?

Charles Tolman
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@Hua: ATVI/Blizzard sees only a small percentage of the total revenue raked in by WoW in China.

Mao Li
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WOW Players in China definitely contributes a great amount to the total revenue for Blizzard; recently revealed the 2009Q3 earnings of THE9, who runs WOW in China previously, their earning dropped 94% comparing the 2008Q3, which is 59.8 million USD. You can find the detailed report and analysis from the link here: http://www.rawplunger.com/2009/11/the9s-net-revenue-fell-94-after
-losing-world-of-warcraft/


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