China Probing Blizzard-NetEase Venture?

July 14, 2009 by Joel Tan  
Filed under MMORPG News

Rumors abound that the Chinese government is investigating the joint venture between Blizzard Entertainment and NetEase, which recently bagged the rights to operate World of Warcraft in China.

Blizzard Entertainment logo

Here’s the lowdown from China-based online games portal 17173:

An unnamed insider claims China’s General Administration of Press and Publication has appointed Shanghai’s News and Press Bureau to investigate a joint venture established by NetEase and Blizzard Entertainment, a division of Vivendi Games and Activision merger Activision Blizzard.

The Chinese government forbids foreign companies from operating online games domestically through joint venture or sole investment. If NetEase and Blizzard’s joint venture is found in violation of regulations, both companies will be penalized.

Apparently, the rumors stemmed from an announcement story by Blizzard Entertainment late last year, saying that the company has entered into a joint venture with NetEase for the operation of StarCraft, Warcraft III: Reign of Chaos, Warcraft III: The Frozen Throne, and the Battle.net platform in China.

Are Blizzard and NetEase violating China laws by launching this joint venture? It’s iffy at best. Let’s break it down.

If I’ve read the rumors right, China law prohibits foreign companies from operating online games in the country. If that’s the case, Blizzard and NetEase may be in the clear as the games mentioned in their joint venture are far from being online games. Oh, sure, they can be played online, thanks to Blizzard’s Battle.net platform, but they’re not exactly online games. This is the reason why Blizzard has World of Warcraft, which falls squarely in the domain of massively multiplayer online games.

What swings the ball to the Chinese government’s court is the inclusion of two words in the licensing agreement between Blizzard and NetEase. What are these words, you ask? Try “Joint Venture” and “Partnership.” Okay, that’s three words, but you get the picture.

Simply licensing a product is far from entering a joint venture for profit, the same way that Starcraft and Warcraft are different from the online game World of Warcraft.

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