Macro Tsimmis

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Activision Blizzard update #3—Blizzard fires The9 in China

Posted by intelledgement on Thu, 16 Apr 09

It has been rumored for weeks that Blizzard would not be renewing their five-year World of Warcraft (WoW) contract with Chinese online gaming company The9 (NCTY) when it expires in June. Now it is official: ATVI management announced today that Netease (NTES), the company awarded a contract for Warcraft III and Starcraft II in China last summer will also be taking over the WoW license for at least the next three years.

WoW reached over a million concurrent users in China in February under The9’s aegis, but Blizzard was said to be unhappy with the pace of WoW growth in general in China and a series of delays of the release of their “Wrath of the Lich King” module in particular, as well as looking for more control over server groups…and more money. Plus, The9 appeared to be on shaky ground financially, and was having difficulty managing the governmental approval process for WoW releases. Indeed, there are reports that some mainland WoW players have defected to Taiwanese servers, because “Wrath of the Lich King” is available there.

The Warcraft III/Starcraft II agreement with Netease reached in August 2008 also runs for three years, but the clock does not start ticking on it until Starcraft II is released commercially in China, and as yet there is not even a release date for the US for that game. So that one is a way’s off from going into operation. Netease presumably paid some money up front in 2008 for those rights…and a lot more now for the rights to WoW per the agreement announced today. So all parties (with the notable exception of The9) presumably have strong incentives to get to work effecting this new WoW contract as soon as possible.

Note: Warcraft III and its predecessors—Warcraft II and Warcraft—are strategy games wherein the player(s) control an army.  Warcraft III is typically played by a couple of players at a time (or a player versus an AI computer opponent), although it is possible for as many as eight players to play in a game simultaneously. Those games all preceded the World of Warcraft (WoW) massively multiplayer online role-playing game, which is based on the prior games in the sense of being set in the same fictional world. A WoW player typically controls an individual character and interacts with a theoretically unlimited number of other players, each of whom control their own character.

In a separate press release also issued today, ATVI management announced that 1Q09 revenues and profits are running ahead of the guidance they provided in February. “Global consumer response to the Call of Duty and Guitar Hero franchises and Blizzard Entertainment’s World of Warcraft remains strong despite the challenging economic environment,” said Activision Blizzard CEO Robert Kotick. “We exceeded our quarterly financial goals as the video game market continues to grow and our franchises continue to perform. This bodes well for our upcoming spring titles Transformers: Revenge of the Fallen, X-Men Origins: Wolverine and Ice Age: Dawn of the Dinosaurs, which are inspired by theatrical feature films releases, Prototype, a new intellectual property, and the release of Guitar Hero Smash Hits as well as continued sales of our recently released Guitar Hero Metallica game.” No revised numbers were provided.

Citing the counterbalancing effect of the Chinese WoW transition costs, Kotick said that guidance for the full fiscal year was unchanged.

Previous ATVI-related posts:

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