As the rumor mill had predicted, Electronic Arts Inc. has indeed purchased a stake in China's online game operator The9 Ltd. However, the Redwood City, Calif.-based video game publisher will spend just $167 million for a 15% stake in the Shanghai-based company, as opposed to the rumored $200 million for a 19% stake reported in mid-April.

The investment makes sense for EA, which needs a local to access the Chinese market. Despite the fact that pirated copies of its games abound, EA needs a legitimate source of income from Chinese gamers, who are willing to spend money playing online games such as World of Warcraft. EA already had an agreement allowing The9 to operate its soccer computer game franchise EA Sports FIFA in China. As part of this agreement, The9 becomes the exclusive provider of the game.

The9 also gets a valuation of $1.1 billion, which is only slightly lower than the market cap of embattled EA competitor, Take-Two Interactive Software Corp.—pretty impressive for a Chinese game company that just started making games of its own.—Stacey Higginbotham

See press release from EA
See Tech Confidential blog item on the rumor
See TheDeal.com story on Take Two