@Bodhesatva
One reason why WoW is so much more popular in China is because they pay so much less to play it. Apparently in China you pay by 4 cents an hour to play WoW instead of $15 a month. Even if you assume addiction level of game playing, you end up with Chinese customers paying less than 1/3 what American or EU customers pay. (Some sources: http://relmstein.blogspot.com/2007/09/what-do-wows-numbers-mean.html , http://www.tgdaily.com/content/view/34205/102/). You could also argue that more Chinese customers play WoW because they face lower opportunity costs with their time (no console gaming alternatives, poor employment opportunities), or for a myriad of other reasons.
Your WoW logic doesn't transfer over to the Wii though. Nintendo can sell the hardware and make a small profit out of the box to the small percentage of the population that has western levels of income, but it can't expect to make too much profit on software because you can easily find pirated Wii games for under $2.00 (http://www.gamasutra.com/php-bin/news_index.php?story=13369). I would imagine that Nintendo considers this more as a chance to bring up a generation of Nintendo fans and position itself well for the future than as an opportunity to immediaely turn a profit in China.
I think PPP is fine for comparison, because companies set the price of their hardware. Price discrimination is a time honored tradition for monopolies, and console manufacturers are exactly that - a monopoly. It's similar to how big pharmaceutical companies charge the US the most for their drugs, and sell them cheaper to less wealthy countries. That's why you see different prices in different countries, and in particular why you see much lower prices in China for WoW.
Albionus definitely posted the best analysis (although I couldn't find his figures on the worldfactbook), but nothing that I said was false. WoW is profitable because 4 cents an hour is better than nothing. You can't do that for the Wii (except for Virtual Console games.
