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NetEase Expected To Resolve WoW Regulatory Troubles In China Soon

Chinese authorities are expected to imminently announce a resolution for the country's World of Warcraft operator Netease, which was accused of disregarding certain regulatory demands last year.
China's General Administration of Press and Publication (GAPP) and the Ministry of Culture (MOC) are expected to announce an agreement between the two organizations regarding a possible punishment and fine for the country's World of Warcraft operator NetEase, allowing the company to continue running the MMORPG, according to media reports. NetEase's troubles stem from a dispute between the two government bodies last November in which GAPP ordered the operator to take World of Warcraft offline and refuse new account registrations due to "gross violations" of regulations. NetEase refused to do, as it received a go-ahead to run the game from the MOC, which recently took over regulatory responsibilities for the online game approval process in September 2009. The MOC responded to the suspension notice by holding a press conference disputing GAPP's accusations and claiming the organizations violated a a higher-level State Council provision on the approval process for online games. Both groups seem to have a come to an agreement since their public spat and expect to announce sanctions for NetEase in mid-January, according to a local report summarized by China-focused research firm JLM Pacific Epoch and backed up by a GAPP official's comments to Reuters. NetEase has faced a number of challenges relaunching Activision Blizzard's World of Warcraft since took over the game from its previous operator in China The9 last June. The game's transfer to NetEase was followed by two months of downtime and a long closed beta, the latter of which cost NetEase significant amounts of money to sustain without player revenue. The recent problems with China's regulators have taken its toll on the company's stock, too; NetEase's shares have fallen 23 percent from their record high in September 2009. There's hope the price will shoot back up, though. "Investors still have a wait-and-see approach to the situation, but I think if there is any speedy resolution, that will be positive to the share price," predicted JPMorgan analyst Dick Wei, talking with Reuters.

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