The Chinese GAPP & NCA have re-iterated and apparently strengthened their regulatory powers over online games operated out of China, requiring preapproval before any game can be launched, and completely forbidding any foreign investment in Chinese operators of online games. The announcements had an immediate impact on major operator NetEase which saw its stock price fall more than 5pc. NetEase has operated WoW in China since June of this year, back online just weeks ago after months of downtime.
Between collectors editions and normal retail boxes, the core game and expansions, the NPD reports that World of Warcraft has pushed 8.6 million units in the U.S. to date.
The NPD gathered together data for all retail releases of World of Warcraft, from the Battle Chest to Wrath of the Lich King, coming up with 8.6 million units sold at retail.
This is purely a stock play deftangel :( No amount of sense is going to put this stock price back where it belongs.
Unfortunately this is the only way to make money these days on TSE. Just look at this week's Beatles IPOs today. They are already being set up for massive losses (it's clear a single has set up a shorting scheme to beat the street).
Essentially this is what I've been doing with the Lich King stock. All of my growth in the past 6 months has been in the immediate moments following an IPO (before the short game starts) and running shorting scheme on Lich King.
if anything we should be thanking whomever is bouying the price of this stock! :D
This figure from NPD includes every SKU released at retail in the US, which is probably their second biggest market after China.
This is hard numbers on retail sales, not subscribers. The number of sales will be higher than subscribers due to churn
Personally, that's not as many as I expected. Lets do some napkin calculations.
As of January 2008, we know from NPD that Burning Crusade sold 2.25m. Most indications are that Lich King outperformed it. Lets say today, that's maybe a healthy 3m or so. That's over a third of our definitive 8.6m figure so not un-generous.
Also in 2008, Blizzard estimated North America to be around 25% of subscribers, it would be reasonable to estimate the US market alone therefore represents approx 20% based on traditional NPD / NPD Canada data we have.
Some estimates have put China as representing as much as 50% of subscribers. Again, erring on the side of caution and making the calculation easy, lets dial that back to 40%.
This is all very rough and subject to a wide error margin of course, but just by way of example. You could then posit that Lich King has sold around 9m copies LTD to 60% of WoW userbase.
Lets pretend the present uncertainty over the Lich King in China gets sorted out tomorrow and every subscriber buys it straight away (i.e. they don't get it for free like Burning Crusade or that still counts as a "sale"). Now we're up to 15m LTD.
So even with these rather generous assumptions the WoW subscriber base would need to grow 33% world wide on these figures to challenge the 20m GLS.
As I've argued on here previously, I would venture there are several other mitigating factors that should dampen expectations on this rather rosy outlook.
The NPD Group rolled up multiple SKUs of the massively popular PC online game and its expansion packs since its November 2004 launch to arrive at the 8.6 million figure. The statistics provided by NPD included the base World of Warcraft, plus the Collectors Edition version, the expansion pack-bundling Battle Chest, and the two standalone expansions: The Burning Crusade and Wrath Of The Lich King.
WoW should be getting back online in China soon, still without the Lich King expansion. The GAPP have requested NetEase make "further content changes" before they'll give it approval.
Bearing in mind they previously didn't require the same of The9 it illustrates their continued clampdown on foreign MMO's. It will be interesting to see just what NetEase had to do to get approval when it happens.
Seeing as there has been a somewhat heated discussion about this lately I've posted this article myself so the appropriate context can be added.
I have already posted about the Chinese WoW servers being down, it's now been about a month. This article speculates as to why they haven't come back up sooner. From the article;-
The current issue may be political. Activision Blizzard ended its relationship with former WoW operator The9 due, I believe, to EA’s 15.8% stake in The9. But it is also geopolitical: the Chinese General Administration of Press and Publication (GAPP) has to approve the release of “an electronic publication belonging to an overseas copyright holder”. Marbridge Consulting reports that:
“At the 2008 Annual Meeting for China Online Gaming, GAPP said that in order to protect the interests of domestic gaming enterprises, it would suspend review of all games belonging to foreign companies in the event of lawsuits or arbitration between foreign companies and Chinese companies.”
So perhaps unsurprisingly, The9 has brought four lawsuits against Blizzard in Shanghai. And the Warcraft servers stay down. I’m sure that competitors are swarming to attract former WoW players to their own MMORPGs even as we speak.
The new operator, NetEase needs a licence to operate WoW in China. The Chinese government have neglected to give them one, presumably at present because of the filings from The9. The GAPP ruling to which the article refers essentially allows a domestic company to raise objections about foreign companies operating in China which may or may not result in them being taken offline for a period of time. If that sounds like a lot like a protection racket for the Chinese MMO operators, that's because essentially, it is.
Now lets be clear.
Blizzard will get this sorted out eventually. Despite the fact it's not the biggest earner for them, the Chinese market is by far the biggest and also still growing at a rapid rate.
What I think is up for debate is how many of the existing subscribers come back when this is sorted out.
The flip side of this is that it might encourage Blizzard to pull their finger out with the Lich King expansion to entice back any lost customers.
It's also worth pointing out that even when NetEase get the licence for WoW sorted out, to release the Lich King expansion they will still need a new licence. The Chinese regulators already declined that once on the basis of some of the content in it. It will be in Blizzard's interest to localize and make changes where appropriate though in the Lich King's case these would be fairly extensive.
The issue however that if there is anything remotely borderline about the whole thing, another domestic MMO regulator could simply raise an objection and it will get suspended and reviewed again.
Clearly, NetEase did not enter into a deal with Blizzard for nothing so WoW will be back at some point. For now though, the ongoing dramas continue.
Disclaimer 1) I'm short on the expansion 2) I'm obviously posting the news as I believe it to be a) relevant and b) over-valued 3) I've attempted to be both balanced and upfront on my opinion. If you disagree, downbid all you like.
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And the stock price of a third round expansion pack, (when the original has not even come close to selling 21 million copies), pushes ever higher!