World of Warcraft gets a new Chinese partner

NetEase to run massively popular game in mainland China, former operator The9 sees stock slide 30 percent on loss of license.

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World of Warcraft is big business in markets all over the world, but there's no market bigger than China. That's why Activision Blizzard's announcement of a new licensing deal for a company to operate the massively multiplayer online role-playing game in mainland China is being felt far beyond that country's borders.

The World of Warcraft license has flown the coop.
The World of Warcraft license has flown the coop.

The9 Limited has held the license to operate World of Warcraft in China for the last five years, but that run is coming to an end. Activision Blizzard today announced that it will give that right over to an affiliate of another China-based MMOG operator, NetEase, for three years to commence at the expiration of the current deal with The9.

The switch in license holder should not come as a complete surprise. After all, chief Activision Blizzard rival and publisher of the Warhammer Online MMOG Electronic Arts owns a 15 percent stake in The9. In addition to EA-related games like FIFA Online 2 and Hellgate: London, The9 serves as the Chinese partner for titles like Huxley, Ragnarok Online 2, and Field of Honor.

NetEase is no slouch in the online game world, either. The company already had the license to oversee Activision Blizzard's Warcraft III and Starcraft II in China, in addition to a stable of other games, including Westward Journey Online II and III, Fantasy Westward Journey, and TianXia 2.

Rumors of the licensor switch first surfaced after the close of trading Tuesday, when shares of The9 sold for $13.22 on the NASDAQ Global Select market. Since then the stock has shed nearly 30 percent of its value, trading at $9.26 as of press time. NetEase stock was less impacted by the news, trading up a little less than 3 percent to $30.59. Activision Blizzard stock was also up less than 3 percent to $10.31, although that gain is partially attributable to the publisher's announcement that it would beat previously announced projections for its recently completed quarter.

Activision Blizzard is promising a smooth transition between the two partners, though it's unclear when the handover will actually take place. Similarly unclear is what effect this move will have--if any--on Activision Blizzard's attempts to curb gold farming in World of Warcraft. In China and other Asian countries, a number of companies exist that run gold-farming sweatshops to amass virtual currency in online games, which they then sell to players for real currency.

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