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Thursday, August 7, 2008

The Nine (NCTY) reporting tonight

They do online games but none really matter to revenue outside of World of Warcraft which makes up 90 percent of NCTY revenue. Their license for WoW ends pretty soon. Its expected that Activision Blizzard (ATVID) is going to negotate much less favorable terms for NCTY. Don't see why they wouldn't -- NCTY has no negotating power at all -- they're completely dependent. All the analyst models have WoW assumptions for 2009 -- though expectations have been scaled back somewhat.

In theory the olympics will be a drag on online gaming revenue for the month of August which could lead to a shortfall in near-term guidance.

To recap: The license expires at the end of the year. It's already in the models. If ATVID doesn't renew the license at all, NCTY would eventually go to zero.

Seems like bad risk/reward?

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