NetEase regulatory saga near end -govt official
* Regulators expected to announce decision soon
* Speedy resolution will be positive for shares-analyts
* Blockbuster game expansion pack could be launched soon
By Melanie Lee
SHANGHAI, Jan 4 (Reuters) - China's third-largest online game operator NetEase.com (NTES.O) may be close to resolving a dispute surrounding one of its hit games by paying a fine to Beijing regulators while being allowed to keep operating the game.
Since last November, NetEase has been caught in the middle of a regulatory spat between China's General Administration of Press and Publication (GAPP) and the Ministry of Culture (MOC) over its operation of the popular online game World of Warcraft (WoW).
GAPP ordered NetEase to cease operation of the game due to "gross violations" of regulations, but NetEase did not comply as its operation of the game had been approved by the MOC.
A GAPP official told Reuters on Monday that a resolution and announcement regarding NetEase's operation of the game, developed by Activision Blizzard (ATVI.O), will be unveiled "very soon".
Domestic media quoting unnamed sources reported last week that GAPP and the MOC have reached a consensus to fine NetEase, and will make their announcement in mid-January.
A NetEase spokesman declined to comment on market rumours, but said the firm did submit a report giving its views on the matter to the Shanghai government, another signal the regulatory drama is coming to an end.
"Investors still have a wait-and-see approach to the situation, but I think if there is any speedy resolution, that will be positive to the share price," said Dick Wei, an analyst at JPMorgan.
NetEase shares have fallen about 23 percent from their record high achieved in September last year.
NetEase, which saw two consecutive quarters of disappointing results, is facing tough competition from Tencent Holdings (0700.HK) and Shanda Games (GAME.O) as gamer interest in its self-developed online games begin to wane.
However, analysts told Reuters that NetEase may have an ace up its sleeve and may release the eagerly anticipated expansion pack to WoW once the regulatory dispute is settled.
"There is at most a one-month timeframe," said one analyst who declined to be named.
NetEase declined to comment.
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