Wed, November 04, 2009
The Ministry of Culture (MOC) Tuesday accused the country's press regulator of overstepping its authority in regard to the widely popular World of Warcraft online video game.
Li Xiong, chief of the Department of Cultural Markets under the MOC, said during a news briefing Tuesday that the GAPP had no right to authorize NetEase to stop hosting Activision Blizzard's "Burning Crusades" – the latest expansion pack to Blizzard's multi-billion-dollar World of Warcraft (WOW) cash cow.
One ministry openly criticizing another is rarely seen in China.
The GAPP did not comment Tuesday.
WOW is classified as an MMORPG, or massively multiplayer online role playing game, in which players control a unique character with abilities such as magic and complete in-game missions by themselves or with any of the 12 million monthly subscribers the game developer boasts.
Li's words came after the General Administration of Press and Publication (GAPP) issued a statement Tuesday on its official website, saying it had returned the application of NetEase, the No. 2 online game company in China, and terminated its operation of the game, saying that NetEase had continued hosting the game before being granted approval and calling such action a "gross violation of regulations."
But the MOC claimed that online games don't belong in the category of publications, which are under the jurisdiction of the GAPP, saying that the management of online games falls under the direction of the ministry.
"Although there are different views between the two parties, the case should be conducted in strict accordance with the disciplines of the State Council," Li said.
An official document released by the State Council in July 2008 stated that the MOC is in charge of online games while the GAPP is responsible for reviewing the games before they are officially launched online.
Liu Qiang, an official with the Ministry of Culture, said in a previous interview that NetEase was permitted to operate the game.
NetEase's shares ended down 2.41 percent at $37.69 on the Nasdaq, and Activision Blizzard's stock ended down 4.3 percent at $10.37, respectively, following the decision that urged NetEase to stop taking new registrations and payments for the game.
Liu Youcai, a marketing officer at NetEase, used a Chinese saying to describe the current situation, saying, "When the gods fight, we little ghosts suffer."
NetEase resumed operations of the World of Warcraft at 9 am Tuesday after temporarily shutting the site for maintenance, according to Bloomberg.
Still, doubts surround GAPP's current stranglehold on NetEase operations, as the game's content had already been approved while being run by the former Shanghai-based hoster, The9, from 2005 until June 2009, before the contract between The9 and Activision Blizzard expired.
NetEase submitted an operating request for the game to the GAPP for review and approval in June. But the procedure proved lengthy, causing the game's servers to be shut off for almost two months, causing a reported economic loss of 5 million yuan ($568,000) per day and pushing back the release of the "Burning Crusades" expansion.
NetEase started hosting World of Warcraft commercially in China on September 19 as the new sole China-based distributor for the game, under a three-year contract with Blizzard.
WOW has about 5 million subscribers in China, according to Caijing magazine.
"The game is like a virtual version of real life where you have loving friends and hateful enemies," a WOW player who asked to remain anonymous, told the Global Times.
The authorization battle has inconvenienced all of the game's loyal fans in China, he said.
Analysts said the spat is a sign of the regulatory turf battle over the massive online game market in China between the GAPP and the MOC.
China is home to millions of online game fans, with media reporting that about 40 million pay the subscription fees, which are usually monthly. The annual profit from such games in China has reached about 20 billion yuan, and it's growing by about 60-70 percent a year, according to reports.
"Technology moves so fast and regulations have a hard time keeping up, which creates a lot of ambiguity," Edward Yu, chief executive officer of Beijing-based research company Analysys International, told Bloomberg.
WOW enthusiasts are still finding a way to get their game on, though, as they can access overseas servers, even if they are slower than a locally based one.
"The two departments are just fighting a war of words, but neither of them has paid enough attention to the development of China's cyber game industry," said Hu Yanping, director of the Data Center of the China Internet.
