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WoW China Transition To Spell Downtime, Possible User Declines

As World of Warcraft's operator license in China changes hands from The9 to rival NetEase, the game's servers will see some downtime -- which could result in a hit to WoW's worldwide user numbers.
As World of Warcraft's operator license in China changes hands from The9 to rival NetEase, the game's servers will see some downtime. In a letter published to its users, WoW servers in China will be down starting on June 7 until NetEase opens the first server group. Additional server groups will open up from June 20 on. Although users will get some free playtime based on how long they have to wait to get back up, Lazard Capital Markets analyst Colin Sebastian says this downtime could result in some "subscriber churn" that could affect WoW's total global userbase. "We expect some churn among infrequent users off of the current 11.5M+ WoW subscriber count," says the analyst. "In fact, data suggests declining timecard purchases ahead of the transition." Activision needn't expect much of an impact to its revenues thanks to the transition, however. Asia accounts for about 50 percent of WoW's global userbase, suggests Sebastian -- but contributes less than 10 percent of total revenues because of its licensing structure and timecard-based payment model. The $10-$15 million Activision will lose in the transition will be "more than offset" by the higher royalty rate NetEase will be paying to operate the game -- $100-$120 million, as opposed to the $70-$80 million WoW's China operations were bringing in before.

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