Blizzard Being Suspected of Illegal Joint Venture, WOW Facing Suspension Forever in China

Oh please, oh please, let this be true, Ernie!

Sauce: http://news.mmosite.com/content/2009-07-14/20090714054025804.shtml

According to a source, the General Administration of Press and Publication of PRC has assigned Shanghai News and Publication Bureau to make a thorough investigation into the issue relating to the joint venture established by Blizzard Entertainment and NetEase. If it is proved that this joint venture is established to operate games, NetEase and Blizzard will be punished for violating the relevant regulations of China.

The US-based Blizzard Entertainment (a subsidiary of Activision Blizzard Inc, NASDAQ:ATVI, hereinafter referred to as "Blizzard"), renowned for the successful launch of World of Warcraft in China, is now trying to play "edge ball" against China's regulatory policy. As for the operation of World of Warcraft and other games in China, Blizzard is no longer content with the role of game provider any more, instead, it's trying to achieve "absolute control" through various methods.

Several Chinese online game operators analyzed, "The licensing mode grants foreign game developers little control over channels and clients, and they consequently receive drastically less revenue from the game." In such situation, how to effectively evade policy supervision so as to actually control the operation of their online game products in China has become one of the important strategic concerns of some foreign online game developers.

The Chinese law stipulates that, foreign enterprises are not allowed to operate online games in the Chinese market in the form of wholly owned company or joint venture. On April 16, 2009, Blizzard and NetEase jointly announced that the operating right of World of Warcraft in China Mainland would be handed over to NetEase after the contract with The9 expired. Since then, there have been many rumors about how NetEase had obtained the operating right of the "No. 1 online game in the world" in China. There are two issues most concerned by the people. One is NetEase paid a sky-high revenue share to Blizzard, which will quadruple the gains of Blizzard compared to the gains obtained from the cooperation with The9. And the other is Blizzard and NetEase established a joint venture to operate World of Warcraft and other games in the name of providing technical support. And particularly, recently some medias analyzed the relevant information disclosed in the financial statements (20-F) of 2008 submitted by NetEase, which attracted the attention of the game industry and the relevant competent authorities. It's learned that the government authority in charge of investigating this case has obtained a great deal of relevant information.

Because recently, many game medias and players are paying close attention to World of Warcraf's operating right transition, and because it relates to the key question whether joint venture companies can operate games in China, the General Administration of Press and Publication of PRC has specially assigned Shanghai News and Publication Bureau to investigate deep into this case. Industry analysts pointed out that, because the case involves some major regulations and policies, it's highly likely that the approval of World of Warcraft operating right transition will have been suspended before the investigation results come out.