(I'm 18)
As some have said, limit his playing time to 3-4 hours a day. Maybe if he's doing well in school (or doing well in whatever else aspect) bump it up to another hour. That's the most simple way I can think of.
I played Wow earlier in the year for about 2 months a lot, it replaced a lot of other hobbies I had and I was always playing with a couple of friends I had in real life, it was distracting me from my classes a little bit but not too much to the point of being worried (I'm a film maker). I played it and I know several people who have the same reason, that I mainly played it due to depression and a complete lack of confidence in anything I was doing, it distracted and kept my mind busy for hours a day. I never got addicted to the game I was able to stop after my subscription ran out and haven't been back to it since (though I'm intending to go back at a point when I feel comfortable to).
The reason I stopped playing was because a girl came along and we fell in love with each other instantly and have been happily with together for over six months now, we're both of the mindset we're soul mates and everything has felt perfect since, so it's very fortunate this all lined up.
Sorry if it's largely irrelevant to the situation, but thought I'd give some perspective from my own experiences. I guess what I'm also saying is that he might have some issues that you don't know about and a reason he wants to play if he's arguing with you about it so much. If he has his online friends it's definitely something that will affect him and in my opinion would be a bad idea to keep him away from them, I know my online friends have helped me more than most would think. You also run the risk of him disliking you and his mind telling him that for years down the track.
I'd say just try talking to him about everything, it's hard with a 12 year old (I certainly was) but if there's something wrong in life then try and help him fix that.
Also, don't suggest what else he can do, coming from personal experience when my mum makes suggestions at times it pretty much deters me from doing that option, it's just how the brain works I spose. At these ages we don't like to be told what to do.
Well hope something out of that wall of text helped, good luck with it all and let everyone know how things are going.