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Posted by Jimmothy on Apr 15, 2009

The Contract You Don’t Want To Lose: World of Warcraft

Word on the street is that when Blizzard cut a deal in China to have NetEase distribute StarCraft II when it comes out, they also gave the contract for hosting Blizzard’s WoW servers over there to NetEase. This news just came out and has already cost the company who currently has the contract about $2.45 per share of their stock, today alone. The9, the former owners of the WoW contract, were apparently offered a significantly lower amount than they paid for their hardware and staff which are dedicated to WoW operations.

Imagine you were awarded the contract to host WoW servers for a country with over a billion people in it and you went out and bought $73 million worth of new servers and hardware to perform the task and collected and trained all of the best people you could find to support these operations. Now imagine losing the contract and having the competitor that was awarded the contract come in and offer you $22 million for the hardware and servers and a measly $1 million for your well-trained and seasoned staff, how happy would you be?

Regardless of how happy you would be, you’re stock holders are pissed and by mid morning will have dropped your stock price by 18%. I would have to say that it would really suck to lose a contract like that, could you imagine if IBM, the maker of those nice cell processors, lost their contracts with Microsoft and Sony’s gaming divisions?

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