China's millions flock to World of Warcraft

Blizzard claims more than six million World of Warcraft players worldwide

More than 4.3 million World of Warcraft user accounts were paid for and activated in China during the past year, according to the company that operates the multiplayer online game in the country. 

The game's developer, Blizzard, is claiming more than six million players worldwide, suggesting that China has more players than any other nation and could already account for more than half the global total. 

However, China's World of Warcraft players are still in the dark about the game's future.

The9 Ltd, which operates World of Warcraft in China under licence, admitted last week that Blizzard has still not given it permission to update the game with the forthcoming Burning Crusade expansion. 

Blizzard is asking for a larger cut of the game's profits in China, sources say, and appears concerned that The9 will also operate a competing online game, Guild Wars.

But The9, which made more than $26m from the game in the first quarter, is refusing to renegotiate the terms agreed when World of Warcraft was launched in China.

Private negotiations between the two companies went public last month when Blizzard, a division of Vivendi Games, took the unusual step of announcing that The9 would have to 'negotiate' for the Burning Crusade expansion, which will be released next year.

Such expansion packs are typically played as part of the original game, and cannot be operated independently.

In the same statement, Blizzard warned that it was "actively exploring and discussing cooperation opportunities and further expansion of its business" with other companies in China.

The9 still relies on World of Warcraft for 99 per cent of its revenues, but is attempting to diversify by developing and licensing new games.

The move to diversify may in fact have provoked the hitch in discussions. Blizzard's abrupt warning about the troubled status of negotiations with The9 came just one week after The9 announced it would license Guild Wars, a major global competitor to World of Warcraft, from Korea's NCSoft Corp. 

Jun Zhu, chief executive at The9, tried to dampen speculation that Burning Crusades could somehow be operated by another company independent from his firm's existing World of Warcraft servers.

"As mentioned and explained in all the Blizzard media alerts, we call the Burning Crusade an expansion pack. That is very clear," said Zhu, speaking through a translator.

"Secondly, we are already in discussion with Blizzard regarding this expansion pack. Thirdly, all of our discussions will be based on the original licensing agreements between the two parties."

Zhu told analysts during a conference call that he did not comment on the progress of negotiations with Blizzard.

He was unable to provide any information on the schedule for public beta testing of the Burning Crusades expansion, saying it was still under discussion even though he was able to give such information for other forthcoming games.

One China-based analyst, speaking on condition of anonymity, told vnunet.com that Blizzard appeared to have been surprised by the games' unexpectedly rapid growth in China, and was now trying to negotiate much more favourable licensing terms for the expansion pack, possibly with stronger guarantees of service quality.

The9 has faced complaints from Chinese players over server outages and long log-in times as it struggles to cope with the influx of gamers.

Company executives said in an earnings announcement that The9 generated $7.3m in net profit and $26.5m in revenues in the first quarter, about 99 per cent of which came from World of Warcraft.

Of the 4.3 million registered player accounts in China, on average 300,000 are playing at any one time, according to The9. During peak hours there are up to 610,000 playing simultaneously.

The9 generates average revenue per user of $0.043, according to chief financial officer Hannah Lee. This is a fall of about three per cent from the previous quarter, a drop that Zhu attributed to technical problems with a database, rather than an actual fall in income.

Launched in China only one year ago, World of Warcraft has generated intense interest, outpacing all other massively multiplayer games in the country. The game's user base now seems to be growing beyond China's main urban centres.

"There is an increase in usage in the second- and third-tier cities," said Lee. "But we don't have the exact percentage of the composition of our revenue. "

Anecdotal accounts suggest another factor driving the increase in players. The game has also become very popular with so-called 'farmers' who play simply to generate items in the game which can be sold to players overseas for real world cash.

One operator of a Chinese farming company, speaking to a foreign researcher earlier this year, estimated the number of such players in popular online games in China at 200,000.

World of Warcraft is a notable income generator for Blizzard's parent company, Vivendi. "Vivendi Games' quarterly earnings from operations were €23m, up 109.1 per cent compared to the prior year," the company announced earlier this month.

"This dramatic improvement was driven by a growth in revenues, with an increased proportion relating to the higher margin of World of Warcraft business."