Massive server purchase likely in Chinese Warcraft deal

World of Warcraft's current operator in China could be left with a pack of idle blade servers

Chinese online game firm NetEase.com will buy all-new servers to start operating World of Warcraft in China this year, potentially leaving masses of unused computing clusters in the hands of the current Chinese operator.

NetEase will distribute and run the game in China for three years after current operator The9's license expires in June. NetEase announced the deal with Blizzard Entertainment, the game's U.S. owner, on Thursday.

NetEase will need massive servers for the extremely popular game. Chinese Internet cafes are often packed with teenagers who chain-smoke as they play the game for full days or nights.

But NetEase will not buy any equipment from The9, instead buying new servers to run the game, a NetEase spokeswoman said by phone Friday.

The9 declined to comment when asked how it will use its servers when they are no longer needed for World of Warcraft. The servers could be used for other games The9 operates, but World of Warcraft brought the firm over 90 percent of its revenue in 2006 and 2007, according to its most recent annual report.

The9 owns an estimated 5,000 to 10,000 servers, and most are probably the high-performance blade servers that Blizzard requires for its online games, according to Thomas Zhou, an analyst at IDC.

Two of The9's blade servers made a list of the 100 most powerful computers in China last year compiled by the Specialty Association of Mathematical & Scientific Software, an industry association.

Six blade servers owned by an unnamed gaming company made the top 50, highlighting the computing power needed in the industry.

The9 will likely seek new uses for its servers as they would be difficult to sell, said Zhou.

Blade servers have a small market in China. About 40,000 are sold each year, mainly to online game firms, oil companies and science institutes, said Zhou. Selling them secondhand could be a challenge when firms in most industries use less advanced tower or rack servers, he said.

NetEase owns even more servers than The9 but will likely have to buy at least 1,000 new blade servers to take over World of Warcraft, Zhou said.

The servers The9 bought for the game may create expenses on its balance sheet even after the game moves to NetEase.

In 2007 The9 started spreading the cost of its server purchases over four years on its balance sheet to match the revenue it planned to make back from them, according to its annual report. If The9 keeps that practice, any servers it bought in the second half of that year or later would generate expenses until well after it loses World of Warcraft.

(Sumner Lemon in Singapore contributed to this story.)

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Owen Fletcher

IDG News Service
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