China Shuts Down World of Warcraft

World of Warcraft spent a lot of 2009 sleeping in China, with its servers offline. Now a more crushing blow has been dealt to its WoW community. Reuters reports that the General Administration of Press and Publication of China, or GAPP, has revoked NetEase's permit to operate the game on its territory. The company is Blizzard Entertainment's localization partner that enables the game to be played in China.

NetEase received the contract from Blizzard this April, but has already managed to cause problems for the company in China. According to GAPP, the company committed "gross violations" of Chinese law and, as a result, it has ordered NetEase to stop charging WoW players on the Chinese territory and to cease accepting any new registrations as well. The General Administration of Press and Publication also refused to accept the localization of the game's first expansion pack, The Burning Crusade.

The biggest consequence so far for the company is the plunge its stocks took on the NASDAQ. The end-day value was of $37.69, with the shares dropping another 1.38 percent in after-hours trading. NetEase representatives stated that they believed they were in full compliance with China's regulations and that they were seeking "clarification" regarding what exactly the GAPP accused them of.

According to Adam Krejcik, an analyst for Roth Capital Partners, NetEase is caught in the middle of a power struggle between the General Administration of Press and Publication and the Ministry of Culture, which has been waging a crusade against the online video games since the year began. "These guys are essentially stuck in the middle of this power struggle," Krejcik said regarding NetEase.

If World of Warcraft remains inactive in China, Activision Blizzard could see a substantial earning deficit. Janco Partners analyst Mike Hickey talked to Reuters and estimated that $0.05 could be chipped away from the company's per-share earnings, which are right now expected to be of $0.65 for the 2009 fiscal year.