While in the US and Europe the players of World of Warcraft pay a monthly fee of around $15 directly to Blizzard, the situation in China is much different. First of all in China there is no monthly fee, but Chinese players buy pre-paid cards from which the equivalent of 5 US cents per hour is deducted. The other big difference is that the money doesn't go directly to Blizzard, the pre-paid cards are distributed by a Chinese company, The9 Ltd, and Blizzard gets only 22% of the money, that is just 1 US cent per hour per customer.
With 4.3 million players in China, even 1 cent per hour adds up to some serious cash. But as these players on average play 60 hours per month, Blizzard earns only 60 cents per month per Chinese customer, which isn't much compared to the $15 from each customer in the US and Europe. So understandably Blizzard is fighting with The9 Ltd for a bigger share of the pie. But as The9 Ltd is equally understandably loth to part with all that money, Blizzard is now holding the Chinese WoW players hostage.
Blizzard has decided not to release the Burning Crusade expansion in China unless The9 Ltd coughs up more money. They also threaten to look for a different distributor for their pre-paid cards in China.
I just hope nobody blames the problem on the pre-paid cards for hourly payments. Because I'd really, really, would like to see that business model applied to the US and Europe as well. I'd be quite willing to even pay 10 US cents per hour played. With the hours I play on average that would cost me about the same amount of money per month than a monthly fee, but would feel a lot fairer. Blizzard's operating cost for servers, bandwith, customer service, etc., are all directly related to the number of hours played. I always found it very unfair that somebody who plays the game for only 50 hours per month pays the same as somebody who plays for 500 hours per month.
The advantage of an hourly payment model is that you wouldn't have to cancel your account if for some reason you stopped playing for a while. As it is, if your interest in a game declines, and you find yourself only logging on occasionally into the game, you can't justify the $15 monthly fee to yourself, and often just cancel the account. And then something major like a big content patch or expansion must happen before you resubscribe. Thus with an hourly payment model Blizzard could capture the "long tail" of people playing few hours per month.