World of Warcraft open for business in China

Shanghai-based The9.com, winner of last year's bidding war among Chinese game operators vying for the right to bring Blizzard Entertainment's World of Warcraft to the growing market of online gamers in China, today launched the localized version of the hugely successful massively multiplayer role-playing game in its home market.

Indications are that the China launch could be as successful as what Blizzard has already experienced in this market: The open beta of the game, live since April 26 of this year, has seen periods where more than 500,000 players have been online concurrently.

In a statement, Blizzard president Mike Morhaime today said, “We feel that China offers a huge and eager audience, and it is poised to become the next great region in gaming."

The9 is certainly hoping to be the beneficiary of that growth. The company competed vigorously with the larger and more experienced online game operator Shanda for the right to bring WOW to China. To facilitate the capital expenses required to support the product, the company went public on the NASDAQ in December of 2004 and devoted itself to this day for more than a year--adding to staff and beefing up the infrastructure required to support the game.

As the revenue stream for World of Warcraft in China builds, The9 hopes to see a reversal in its financial fortunes: Last month the company reported results for the quarter ending March 31, 2005, with a quarter-on-quarter decrease to its bottom line of almost 25 percent (on revenues that increased almost 45 percent).

Contributing to the losses were expenses related to the WOW launch, which the company says were wholly justified. In a statement released last month, the company said, "We strongly believe that investment of significant resources in the initial stage of a game cycle is critical, and benefits of such investment will prove to be advantageous in the long run."

But the company knows the battle for profit is no sure thing. In that same statement, the company admitted that even with the powerful reputation of World of Warcraft behind it, Chinese gamers have yet to show a sustained interest in 3D gaming, preferring instead the worlds of 2D gaming. "We continue to believe that MMORPG is a major revenue-generating segment in the China online game market," The9.com said in the statement, adding, "We note that China's online game market is currently undergoing a major transition from 2D MMORPGs to 3D MMORPGs."

Can WOW fuel that transition? The9.com hopes so, saying it is "well prepared" and that "WOW, to the Chinese online game players, is just the beginning."