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Rumor: WoW Expansion Pack Receives Government Approval

Tencent Tech, 5/26/11

The third World of Warcraft expansion pack, Cataclysm, has been approved by Chinese authorities, according to an industry source, and operator Netease (Nasdaq: NTES) will launch the expansion pack soon. According to certain advertising agencies' schedules, Netease plans a major promotional campaign for Q3 2011.

World of Warcraft's peak concurrent user numbers have continued to slide since Netease took over as the game's China operator, according to an industry insider, dropping to less than 200,000 - far lower than the 1 mln achieved when operated by Shanghai-based online game developer and operator The9 (Nasdaq: NCTY).

The source said that Netease is not operating the game at a profit because server and other costs are relatively high, and speculated that since WoW has operated for many years, it may cease updating its content in one or two years. The majority of Netease's revenues currently come from its self-developed games, while WoW accounts for only 15% of total revenues. "Netease is still focused on developing its own content," said the source, "but its partnership with Activision Blizzard boosts its stock price."

Editor's Note: For more information on this topic, please see "Rumor: GAPP to Approve WoW Expansion Pack by May" MD 5/09/11 issue.

Keywords: The9 WoW Netease Internet profit expansion pack NCTY NTES Cataclysm Q3 2011 online gaming revenue PCU

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