If you’re up on the PC gaming world (not admitting anything here), you’ll know that the latest expansion to World of Warcraft (WoW) was announced this past weekend.  The game – which has 12 million gamers in the US, Europe, and Asia – charges users a monthly fee ($15 in the US) to kill monsters and save the world from the comfort of your computer screen.  The original was announced in 2001 and released in 2004.  The expansions, “The Burning Crusade” and “Wrath of the Lich King” released in 2007 and 2008, respectively, while  “Cataclysm” will likely be released in late 2010.  All you need to know about that is “worgen.”  Awesome.

Anyway, what’s more interesting is the worldwide impact of this wildly popular game with an exceptionally long shelf life.  Specifically, I’m interested in the relationship, noted in this Yahoo! News article, between China’s version of WoW and the recent World Trade Organization (WTO) ruling regarding Chinese monopolies on entertainment property.  This relationship could have serious implications for future software, movies, and music released in China.

The differences between American WoW and Chinese WoW are both cosmetic and substantive.  Some of the substantial changes include method of payment, for example.  As mentioned above, American gamers fork over $15 per month for unlimited gaming.  This cost is in addition to the purchase of the game itself, which is another $50.  Coupled with the two expansions, you’re looking at well over $100 to run the latest version of World of Warcraft, even before subscription fees.  The Chinese pricing model is completely different.  WoW cards are sold almost everywhere at a cost of 30 RMB.  If you’re a first time user, you enter in a code from your card to register a new copy of the game.  The game itself is then downloaded for free.  Subsequent cards add minutes to the game, much like the Chinese pay-as-you-go cell phone model.  Last time I checked, each card added over 60 hours of playtime, which is pretty substantial.   This setup is much more effective in China, where users are far less likely to own their own PCs, and so they game at web bars instead.

Some of the cosmetic changes are entertaining in their own right.   China has an extreme aversion to skeletons appearing in games, and so the entire Undead race has been edited to look like a pastier version of the Humans.  When characters die in US WoW, a skeleton is left behind on the ground as a cosmetic effect.  Chinese WoW deaths produce a nice little gravestone instead.

Why is this relevant to the WTO ruling?  Part of it relates to the newest expansion pack, “Wrath of the Lich King.”  Despite being released late 2008 in the US, the game has been rejected on four separate occasions by the Chinese General Administration of Printing and Publication (GAPP).  The official line is that the game was deemed inappropriate for the Chinese people, a plausible explanation given the “skeleton rule” and the expansion’s strong focus on fighting undead creatures.

Beneath the surface, there’s a lot more going on.  All foreign entertainment products coming into China have to be licensed or redistributed by a Chinese intermediary.  With film, for example, China Film Group, and Huaxia Film Distribution Co are the only firms which can do this.  In WoW’s case, it was through a company called “The9,” but since this latest fiasco the license has transferred to another Chinese tech company, NetEase.  It’s difficult to say why NetEase appears to be having greater success in working with the Chinese government, although the expansion still hasn’t been released in China.  Whatever the reason, requiring a Chinese intermediary greatly assists the government’s censorship efforts, develops a strong “middleman” industry, and protects Chinese games, music, and movies by restricting foreign imports.  This was recently deemed illegal by the WTO.

The WTO ruling, if upheld, would force China to open film, books, music, and games to distribution by foreign companies.  The developer of WoW, Blizzard Games, would be able to design their own price model and marketing strategy, while retaining a much greater say in the content.  Blizzard could theoretically open their own chain of gaming web bars based on China’s legal obligations as a WTO member.  With the number of gamers in China, it’s certainly a viable option.  Objectionable content would almost certainly face strong resistance from GAPP, but China will be in quite a pickle.  WTO membership is contingent upon maintaining free markets and unimpeded foreign competition, so the best China can do is appeal and hope for the best.

The constant complaints that the US keeps lodging against China through the WTO are often over the top.  But this complaint has a lot of merit.  Entertainment companies need to have their material protected, and ought to have reciprocity in international markets.  The Beijing University Press can publish whatever they want in the US, but Harvard University Press would need a Chinese liaison to distribute a book in China.  China can send as many movies to the US as they please, but Chinese law puts a quota at 20 foreign film imports each year.  On an ideological level, this ruling should also allow for greater freedom of press.  The Chinese middlemen could easily lose their publishing licenses if they start releasing stuff contrary to government policy, but foreign entertainment companies don’t face that same pressure.

The Chinese blogging community thinks banning skeletons in games is especially ridiculous.  Isn’t this the same country that popularized violent kung fu movies?  And risque flicks like “Lust, Caution” or “Lost in Beijing”?  Most Chinese are confident they can manage their own morality just fine, and slaying hordes of undead is hardly a metaphor for opposing the government.