There might be an opportunity for foreign online games companies, but China's Government regulation, limits to foreign investment and lack of localization could pose a barrier.
First companies to figure how to enter the Chinese market, either alone or by integrating their games into social networks used locally, will probably be the ones winning.
China's online game revenues are expected to hit 73.1 billion yuan ($10.7 billion) in three years, driven by growing Internet penetration. China's Internet penetration is around 27 percent according to the latest government data, compared to over 70 percent in more developed Asian neighbors South Korea and Japan.
Industry revenues are expected to hit 26 billion yuan ($3.8 billion) this year and grow by an average of 41.2 percent over the next three years, said Beijing-based research firm Analysys International. By 2012, China's online game sector will have 230 million online gamers compared with 69 million currently, and rake in revenues of 73.1 billion yuan, it said.