On Friday, the first China Digital Entertainment Expo and Conference (ChinaJoy) took off at the Beijing Exhibition Hall. Much like its motorized counterpart, the online game industry is exploding in popularity.

Preliminary figures from the organizers of the first such exhibit in the world's most populous market show that more than 10,000 visitors attended on the first day.

More than 160 exhibitors, including big names like Sony, Nokia, Ubisoft and Chinese operators Shanda, Sina Corp and Tencent, all vyed for attention with their decorated booths complete with models, computers and posters.

The first official report, based on a survey supervised by the General Administration of Press and Publication (GAPP) and conducted by US research house International Data Corporation (IDC), also proved that online gaming is hot in China.

The report, released at a press conference on Thursday in Beijing, indicates that actual sales in the online game industry last year grew by 45.8 percent to 1.32 billion yuan (US$159 million).

Kou Xiaowei, a department director at the GAPP, believed the growth would have been higher had it not been for the impact of the severe acute respiratory syndrome, which caused the country to shut down all Internet cafes, where 75 percent of gamers played.

Another reason for the lower-than-expected growth was increasing competition, Kou said at the conference, organized by Sohu.com, which operates China's most popular game information website -- 17173.com.

"The game (industry) has just begun and the future of the market will be very bright," said Wu Lianfeng, a research director at IDC China.

The report predicts that the average annual growth of the market will be almost 50 percent from 2002 to 2007 and reach 6.7 billion yuan (US$809 million) in 2007.

IDC China's other report on the development of China's Internet industry in December estimated the total online game playing population at 13.80 million in 2003, rising by 64 percent year-on-year.

It also predicted the figure will grow to 41.80 million by 2007.

Game operators are not the only beneficiaries of the booming business. The China game industry report says that every yuan (12 US cents) spent on playing games generated 6.6 yuan (80 US cents) for telecom operators, 2.65 yuan (32 US cents) for computer, network equipment, storage and software makers, as well as 2 yuan (24 US cents) for the press and publication industry in 2003.

It predicts that the period from 2002 to 2005 will witness fast development for online games.

More Internet companies have entered or will enter the market recognizing its profit-making potential, while operators without technological and capital advantages will be kicked out of the market or acquired by other companies.

In 2003, eight game operators stopped operations due to fierce competition, among other reasons.

The fast growth of this industry has attracted a lot of attention from the Chinese Government.

Yu Yongzhan, vice-director of the GAPP, said at the opening of ChinaJoy that his administration will release an online game administrative regulation in the first half of this year to curb vicious competition and foster the online game industry.

GAPP will also give preference to online game operators with strong in-house research and development capabilities by giving them online publication licenses.

At the same time, it will initiate a Chinese online game project to encourage game developers to create more games with Chinese cultural content, rather than borrowing from Japanese, South Korean or American cultures.

Yu's administration will also help foster the training of domestic design professionals and attract foreign engineers to elevate the capabilities of Chinese companies.

(China Daily January 17, 2004)