World of Warcraft profits tumble in China

China is believed to have more Warcraft players than any other nation

Revenue generated by World of Warcraft in China is falling as the popular online game ages, despite an increase in players, according to the game's local operator. 

China is believed to have more Warcraft players than any other nation, at almost six million registered accounts and as many as 660,000 playing simultaneously.

New data on the game's performance in China was revealed in figures released by The9 Ltd, which operates the game in China under a licensing deal with the US-based developer, Blizzard Entertainment, a division of Vivendi Universal. 

Jun Zhu, chairman and chief executive at The9, told analysts last week that Chinese Warcraft enthusiasts paid a total of $29.1m to play over the past three months, a fall of 10 per cent from $32m in the previous quarter.

Income from Warcraft in China is significant for Vivendi Games, which reported pre-tax profits of $31m in the third quarter.

Blizzard and Vivendi take approximately 39 per cent of the Chinese players' initial sign-up payment and 22 per cent of fees thereafter, according to The9.

The9 ate into its own profits by investing approximately $5m in setting up a new server centre for the game, following player complaints and rumours of pressure from Blizzard.

This helped make room for a marginal increase in peak concurrent users to more than 660,000 shortly after the end of the quarter.

The fall in revenue comes as long-term users begin to desert the aging game in China. The9 is hoping that the forthcoming Warcraft expansion pack, The Burning Crusade, will win these players back. 

"We believe that when we launch Burning Crusade in China, a lot of the old users will come back to play again, and we will also attract a lot of new users," said Zhu.

The eagerly-awaited expansion could boost the number of players to as high as one million during peak hours next year, predicted China-based Deutsche Bank analyst William Bao Bean in a report issued last month. 

However, The9 and Blizzard have still not signed a deal to distribute the expansion, despite negotiations lasting more than a year. Zhu said three months ago that he believed the discussions were almost complete.

Burning Crusade is scheduled for launch in most countries in mid-January 2007. It will be made available in China, Taiwan and Hong Kong "as quickly as possible after that", according to a statement on Blizzard's website.