Chinese online game market to hit millions in 2007

SHANGHAI (Reuters) - China's online game market is seen growing 35 percent to hit $1.3 billion (649 million pounds) this year, according to Credit Suisse, amid strong growth in Internet users, launches of high-quality games and appreciation of the yuan currency.

China's online game market -- the country's single largest Internet segment -- is expected to grow at 11 percent per year, on average, from 2007 until 2017, analyst Wallace Cheung wrote in a research report dated June 27.

A recent industry shift towards a free-to-play business model -- which allows users to play for free but pay for extra features -- also gave the sector a boost, the report said.

"After the popularity of the free-to-play business model in China in 2006, we have seen more gamers switching from one game to another, due to the much lower entry costs for new games," Cheung wrote.

The number of Internet users in China is expected to grow 23 percent this year from a year earlier, the report added.

China, the world's second-largest Internet market after the United States, has more than 140 million Web users.

China's leading game operator The9's -- in which Electronic Arts holds a 15 percent stake -- had strong prospects, Cheung wrote, with The9's "World of Warcraft" continuing to be popular and a major expansion pack in the works.