Enlisting a million North Americans to battle it out in the fantasy realm was a breeze for World of Warcraft. Yesterday, Vivendi Universal's (NYSE: V ) Blizzard Entertainment announced that the game had broken the million-player milestone in North America. But that's just the beginning. It has been an even bigger hit overseas, with more than 4 million paying subscribers playing the game worldwide.
The term "massively multiplayer online role-playing game" isn't exactly household slang for many investors. Even its abbreviation -- MMORPG -- doesn't exactly roll off the tongue. That's OK. It doesn't have to sound pretty to make investing sense.
Earlier this year, Shanda Interactive (Nasdaq: SNDA ) and NetEase.com (Nasdaq: NTES ) became Motley Fool Rule Breakers stock recommendations on the merit of MMORPG's popularity in China. This is a region where disposable income can be scarce given the country's paltry $1,300 average annual income per citizen. However, at peak times, you will find hundreds of thousands of avid Chinese gamers paying to play out their virtual lives online.
The trend has worked out well in some cases. NetEase's stock has climbed by roughly 40% since we singled it out in the newsletter. Shanda investors, though, have yet to be rewarded.
The global success of World of Warcraft factors prominently in another Chinese company, The9 (Nasdaq: NCTY ) . That company rolled out China's version of the online game earlier this year, and it already accounted for 94% of The9's revenue this past quarter.
Unfortunately, the move did not translate into profitability for The9, as seen in last week's report, where it was revealed that the company's loss widened for the quarter. That's a sharp contrast to Shanda and NetEase, each one showcasing healthy profits on fat net margins during the same period.
MMORPG isn't going to go away anytime soon. CNET (Nasdaq: CNET ) is in the process of launching its Gamecenter platform where gamers can congregate, share tips, and set forth on their next multiplayer gaming experience. The next-generation video game consoles are just begging to be connected to other consoles.
Software publishers that aren't in this gaming space will no doubt want in eventually. We're even beginning to see some unlikely players -- such as Disney (NYSE: DIS ) and its free Virtual Magic Kingdom -- entering the market as a way to cash in on the viral brand-building ways of a successful MMORPG franchise.
That's why I'm not as down on The9's poor showing last week as the rest of the market seems to be. The stock has gone from $28 to $18 in a little less than two months, but the company has already found a proven property in the world's most populous nation.
That's got to count for something.
In time, it will.
NetEase.com and Shanda were recommended in the January issue of Motley Fool Rule Breakers. If you are interested in high-octane growth stock investing, you may want to take advantage of the service's free 30-day trial. If you're a World of Warcraft fan and would love to talk with other players, check out our Warcraft discussion board.
Longtime Fool contributor Rick Munarriz loves playing games, and he also doesn't mind telling you that he owns shares of Disney. The Fool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.He recommended NetEase.com to Rule Breakers subscribers.