Competitive gaming is huge in China, where the booming country's youth play immersive online fantasy games. That spunk and spirit, apparently, can also be found in its regulators.
China's Ministry of Culture and China's General Administration of Press and Publications are butting heads over Activision Blizzard 's (Nasdaq: ATVI) World of Warcraft. One regulatory agency is arguing that Activision partner NetEase.com (Nasdaq: NTES) should stop signing up new accounts for the multiplayer fantasy game until it is granted approval. The rival regulatory body is countering that NetEase's paperwork for the title is just fine.
The regulatory wrangling would be somewhat amusing if it wasn't for the dark cloud that is looming over the industry. Regulators are tightening the screws, cracking down on foreign ownership and forcing developers to jump through more hoops in the approval process.
Activision Blizzard's popular title even went dark in China for a few months, when the company decided to switch licensing partnersfrom The9 (Nasdaq: NCTY) to market leader NetEase.
If investors have the same competitive zeal as Chinese regulators, the key players offer compelling valuations.
Company
11/4/09
2010 EPS
2010 P/E
NetEase.com
$39.58
$2.89
14
Shanda (Nasdaq: SNDA)
$49.33
$3.77
13
Changyou.com (Nasdaq: CYOU)
$30.68
$3.19
10
Perfect World (Nasdaq: PWRD) Continued...