China and MMO's

China is a topic I haven't posted about in a while, so after reading Scott Jennings post up on MMORPG.COM this morning I knew I just had to add my own two cents to the matter. I've mentioned previously I've worked in the IT field for over 20 years. First as and IT in the Navy for 10 years (I was an Intelligence analyst in the Navy prior to that), then as a IT consultant for a Fortune 500 firm here in the States. Through my extensive experience I know first hand how prolific the IT attacks are from China. I see hundreds of them daily against Defense Department networks, and I also see the reports of the attempts at industrial intelligence gathering China does against corporations in the United States. As I said, they are prolific. They're also, we believe, government sponsored.

For those that do not know much about China, they have been a Communist nation since the 1940's, and have throughout their history been a nation that has often been out of control of it's own destiny. That fact, more than anything else, is what drives China's culture today. China has a deep seated desire to be in control of itself, and in today's age that more often than not, means being in control of others. That and Communist rule make China a place with few rights and where the rule of law often means little. These "relationships" Scott talks about facilitate business deals the likes of which would get you thrown in jail in the states as they often demand "greasing the rails". "Bribes" are an accepted and expected form in business and government relationships there and I'm convinced the battle between China's GATT and Ministry of Culture over WoW has more to do with power, the growing MMO market, and of course money.

Companies like Blizzard that seek to do business there should think long and hard before doing so. And they should not let the allure of the size of China's market dazzle them as China is not a westernized civilization that is deeply rooted in the rule of law. Laws and regulations can literally change over night, and for no other reason than retaliation against a company or person. China's market is quicksand and no one will make a great deal of money there any time soon. At this point in time China needs western companies more than western companies need China.

WoW has 11 million subscribers. No it doesn't?

Its not often that I really disagree with Tobold but this is one of them. Tobold opens his blog post of the day with the title " WoW subscriptions down to 5 million" and then goes on to write about that since the9 has now officially shut down it's servers because of the loss of its license to netease it effectively means Blizzard has lost about half of its subscriber base.

In asking Tobold where he got his figures from since Blizzard hasn't stated a break down of its subscribers in recent memory tobold replied:

The source is the last Blizzard press release which still announced user numbers by continent. Unfortunately they stopped doing that a while ago, and we can only assume there have been no major shifts since then. Of course from now on that assumption will not be valid any more.

Unfortunately he couldn't point to the source any better than that, however the last time I recall Blizzard releasing any information that detailed was prior to the Burning Crusade when WoW had a few million subscribers. That was at least three years ago if I recall correctly. At the height of the Burning Crusade the best information available indicated Blizzard had approximately 8-9 million subscribers which was a significant growth from Vanilla WoW. I thought Blizzard had indicated they had achieved 11 million subscribers in January or February of this year, but it was actually in December 2008. So from mid to late 2007 to December 2008 Blizzard's subscription base grew from 8 to 9 million subscribers to 11 million. Not nearly has high an increase from Vanilla WoW to the Burning Crusade but still a healthy increase, and still dwarfing any other game on the market. In fact dwarfing pretty much all the major MMOs combined.

Unfortunately Blizzard has not delineated where the growth in that subscription base is taking place. Tobold's belief is that since Blizzard had indicated about 50% of their subscribers were in China (three years ago? And I would still like to see this myself since Tobold can't point to it officially apparently) that any increase in subscribers is linear. 50% three years ago would still be around 50% today. That's an astounding leap of logic considering the amount of advertising Blizzard has done in the United States in 2007 and 2008. Remember the WoW commercials? Perhaps he is right, but perhaps he isn't. One would think that if you are going to make pronouncements of this magnitude one would at least link to evidence of some sort but instead the only link to information in his post was a link to a rumor that NetEase's license is on hold in China.

When I pointed out to Tobold the flaw in his logic, or at the very least the weak evidence he was basing his post on he replied:

I am not suggesting there has been a big drop in subscriptions in the US or Europe. And if WoW comes back up in China in a few weeks, Blizzard will probably be back to 10 to 11 million subscribers. But as Blizzard for years artificially inflated their "subscriber" numbers with the Chinese players (which don't actually have a subscription in the US/Euro sense), it is only fair to point out that these Chinese players currently aren't counting, because the servers are down. Whether the remaining number is 5 or 6 million isn't really relevant for that.

Actually it is relevant Tobold. It's very relevant since you are claiming half of all WoW subscribers are Chinese when we have absolutely no evidence to base that claim on. It could be 10%. It could be 25%. It could be 75%. We simply don't know until Blizzard releases that information so any argument you make about the servers--the9's or NetEase's--are simply an ambiguous figures pulled out of thin air as far as I can tell. I would, however, like to know the demographic breakdown of WoW subscribers as I'm sure you would.

Tobold continued by saying:

Well, when Blizzard last detailed their numbers by continent, half of the 8 million subscribers were in China. In the latest official statement (see http://www.wow.com/2009/05/07/activision-conference-call-wow-still-at-11-5-million-subscriber/) they said that they have 11.5 million subscribers, and growth has been highest in China. So take a bit over half of 11.5 million, and you get 6 million Chinese subscribers. A number that is frequently quoted on all sorts of WoW blogs and forums, because it is the best guess we have. It also fits with the last statement of The9 of over 1 million concurrent users, as the industry rule of thumb is to multiply concurrent users by 5 to 10 to get subscribers.

Of course I could change "6 million" into "5 to 7 million", if that would make you feel better. But the exact number really isn't relevant at all. In any case it's roughly half of WoW's player base that is currently excluded from the game. And with Blizzard's official definition of subscriber saying that "Internet Game Room players who have accessed the game over the last thirty days are also counted as subscribers.", they officially lost those Chinese players today, WoW China being down since June 7.

Unfortunately Tobold seems to have misinterpreted what Mike Morhaime said in May. The WoW blog post Tobold linked to just above says:

Morhaime says that numbers are growing everywhere, but that China will be a main focus of growth this year as Wrath of the Lich King releases there soon.

Morhaime actually says:

“We believe there continues to be growth in WoW in all regions but especially in China. Our first expansion launched eight months after it did here. We’re looking for a similar response when “Lich King” is launched there,”

WoWinsider is saying that Blizzard expects to focus growth in China this year (2009). is Morhaime saying the highest growth has occured in China? He doesn't actually say that, but rather is saying they expect it. Remember, this is a conference call to investors discussing quarterly returns and he would be focusing on what just occured in the preceeding quarter, as well as trying to paint a picture to investors to what they expect to happen in the next.

Obviously Morhaime's expectation on continued growth in China is on hold, and obviously some number of Chinese aren't currently playing. But there have also been a number of reports during the period where the9 was attempting to bring WotLK to China that many Chinese moved to Taiwanese servers. WotLK was never released in China, so they were still playing the Burning Crusade in China proper. The9 lost its license, reportedly, because they weren't able to get the proper permission from the Chinese government required to do so. Blizzard apparently believed NetEase could get that permission and ultimately awarded the license to them.

Whats important in all that is that we don't know how many Chinese moved to Taiwanese servers. It could be all of them that were playing in China, or it could be none. Again, we simply don't know. Which is entirely the point I was trying to make to Tobold and was unable to get him to grasp.

I'm sure we can all agree that Blizzard would have lost some level of subscribers throughout all this. But is it the 50% Tobold says it is? You be the judge--without any more information that I, or Tobold have at our disposal.

China -- keeping people oppressed one happy citizen at a time

China is cracking down again. If you simply read the story and have no greater understanding of the oppressive nature of the country, then you might just take this at face value. However, coupled with GAPPS new rules you can read between the lines and see what this was really all about. China is an oppressive nation, and like all other Communist nations, has walls to keep it’s citizens in rather than keep people out.

Access to the Internet, while relatively prevalent in China, is tightly regulated. The Great Firewall of China is ubiqutous and all powerful, though aspiring young technology savvy users have learned ways around it. And that is really what these new rules are about. Cutting off avenues for Chinese to attain knowledge and ideals that are not approved by the government. The Chinese government does not want cracks in the walls that surround their nation that business relationships can cause to happen. Afterall, the Chinese, more than perhaps any other culture, takes a long term view of things. They want to ensure that over time foreign businesses and interests do not supplant that of the government, and so they tighten their grip and leave foreign investors in an unsavory grey area.

At this point, why would any foreign business invest in China when they can not enforce agreements and protect their intellectual property? The articles both mention the World of Warcraft (WoW). I wonder what Blizzard is thinking at this point considering the articles both allude to the fact that they seemingly will no longer be able to enforce contracts they must have penned with NetEase. I wonder how worried Blizzard is at this juncture regarding what might happen to their game over the next year or two there.

WoW to partially relaunch in China

Massively is reporting that NetEase is being allowed to conditionally release WotLK in China on 30 July. We'd previously discussed the problems WoW was having in China, which turned out to be a boon for the Taiwanese servers (if you want to call it that).

No Olympic event in WoW?

Two years ago the Summer Olympics was greeted in WoW by a mini-event which had you run PVP Battlegrounds in order to earn an Olympic tabard and a special in-game pet (Chinese dragon). I made the mistake of only running do that on my Warlock whom I now don't play, and didn't do it on my Druid and my Paladin, whom I do play and do achievements with. So I was looking forward to the Winter Olympics for the past two years in order to get the Olympic pet. I wasn't expecting the Chinese dragon of course, but rather something a little more Canadian -- a Moose!

Blizzard, for whatever reason, didn't start an Olympic event with the games yesterday. Nor did it start this morning at midnight, so it appears Blizzard is sitting out the Olympics this year and I find that very disappointing. Why create an event for the Summer Olympics and not the Winter Olympics? Some are speculating on the forums that it was simply because the Summer Olympics were held in China and Blizzard was simply ingratiating themselves with China.

Whatever the case it certainly looks badly that no event was launched with the start of the Winter Olympics yesterday and I find that very disappointing.

Tobold sticking to his guns

In followup to yesterday's tussle with Tobold over what I see as highly flawed logic, Tobold posted a couple more comments to yesterday's post. According to Tobold there are no--zero--Chinese accounts right now due to the loss of license by the9, and the rumor that NetEase will not receive permission from the Chinese government to activate WoW until the Chinese courts have adjudicated lawsuits filed by the9. MMO-Champion just happened to run a timely post of their own yesterday that stated a Chinese guild had the world-first kill of Yogg+0 kill. Tongue in cheek, I posted that to his blog and his reply was:

So you think that Taiwan is an inseperable part of China? You communist!
;)

Again, this story is about millions of mainland Chinese players losing access
to their characters. The fact that they can make a NEW account and start over at
level 1 on a Taiwanese or even US server doesn't change anything. They can't
MOVE their existing characters.

I won't get wrapped up in the whole Taiwan/China bruh ha ha, but my point is that Chinese players that had been playing on Chinese servers had moved en masse to Taiwanese servers. There have been ample reports of this nature in the months leading up to Tobold's blog post yesterday so I do not agree with his logic here. It does matter because the premise of the blog post indicating that the WoW subscriber base was down to 5 million is based entirely on the loss of those Chinese accounts on Chinese servers. Once a Chinese player moves from a Chinese server to a Taiwanese server the net effect is 0. One loss to Chinese server, and one gain to Taiwanese server. 11,499,000 players at the loss, an 11,500,000 players at the gain.

An individual character has nothing to do with the discussion what so ever since we're speaking about the player base. An account is an account is an account, regardless of where it's hosted.

NY Times add's it's .02

Thanks to wowinsider.com I saw that the NY Times added their .02 cents on the WoW issue being played out publicly between GAAP and the Ministry of Culture in China.

More on the subscription question

Eurogamer ran an article with a few links to other articles, including this one on Yahoo that ran on 24 June.

Among other things, it said....

Many World of Warcraft players in mainland China have also migrated to the Taiwan server during the transition, even though that means a slower connection and having to start a new account, the Blizzard representative said.

The flood was so bad that...

The flood of players has caused waits up to several hours to log into the Taiwan server during peak evening hours, local media said.

MMO’s are serious business

No, really, they are. And in China there are currently two government bureaucracies that are fighting a very public turf war right now over the fate of WoW there. See this, this, this, this, this, and this about it. Fortunately the war hasn’t progressed past the initial very public declaration from GAPP, so WoW is still up and running there. It’ll be interesting to watch this unfold further, though I’d expect things to meld back into the background. After all, this is something of an embarrassment for the Chinese government, and we know how Communist governments typically take to embarrassment.

And all this over the very recent previous WoW troubles there.