Feeds

China's The9 sued over Warcraft ditching

Caught outside the Blizzard

The Essential Guide to IT Transformation

A US shareholder is seeking a class action lawsuit against Chinese game operator, The9, over its financially devastating loss of a contract to host World of Warcraft in the country.

The lawsuit alleges The9 made numerous false and misleading positive statements to shareholders regarding the company's health and status of licensing negotiations for WoW, while it was becoming increasingly likely its contract to host the online game would not be renewed.

Before Blizzard Entertainment dumped The9 this April for a rival Chinese operator, NetEase, the company was receiving as much as 90 per cent of its total revenue from WoW alone. The9 houses some of the most powerful privately owned supercomputers in the country, which it uses to host a number of online games.

According to the lawsuit, The9 executives repeatedly assured investors its exclusive four-year contact signed in 2005 to host WoW would be renewed, causing artificially inflated stock prices. But many of these statements were made at a time when The9 had not even begun formal negotiations with Blizzard.

In fact, the lawsuit indicates The9's relations with Blizzard had soured as early as 2007 over its operations of WoW in China, yet maintained everything was fine and that a contract renewal was a foregone conclusion up until early 2009.

The agreement was allegedly further strained in 2007 when The9 sold nearly 15 per cent of its ordinary shares to the game maker EA, effectively forcing Blizzard to do business with one of its greatest competitors. A The9 executive told investors the deal would not have any impact on its contract with Blizzard during a conference cal that year — but only when asked directly did he acknowledge The9 hadn't actually discussed the matter with Blizzard, according to court documents.

The complaint also claims during this period, several The9 insiders began dumping company shares in sales described as "unusual and suspicious in timing and amount" for a total of $125m.

The case was filed by Lawrence Glaser on behalf of himself and others in US District Court in New York. It has not yet received class-action status. A copy of the complaint can be found here. ®

HP ProLiant Gen8: Integrated lifecycle automation

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.