As China’s General Administration of Press and Publication (GAPP) and the Ministry of Culture continue to flex their muscles over control of the country’s game industry, World of Warcraft gamers and operators are feeling the brunt of the infighting between the two entities.
Reuters reports that GAPP has stripped NetEase of the ability to operate The Burning Crusade, the latest version of WOW. GAPP cited a “gross violation” of regulations and ordered NetEase to stop charging users to play the game and to cease taking new subscriptions.
NetEase has since responded, saying that they “believe that they are in full compliance with applicable PRC laws and are currently seeking clarification from the relevant governmental authorities.”
Roth Capital Partners analyst Adam Krejcik said of NetEase, “These guys are essentially stuck in the middle of this power struggle.”
Until September of this year, GAPP was responsible for approving all game content within China. The Ministry of Culture assumed some of these duties, but GAPP appears unwilling to give up its authority, leading to the current infighting. WOW was launched in China on September 19 with Ministry of Culture approval, but no GAPP approval, which is now coming back to haunt NetEase.
Analysts estimate that Chinese WOW activity contributes 5 or 6 cents a year per share to Activision’s earnings.