By Wang Xing (China Daily)
Updated: 2007-10-31 10:17

Top officials from Sohu.com Inc yesterday said it will increase its investment in online gaming as the company's game revenue surged nearly 500 percent in the third quarter.

According to the company's third-quarter result released yesterday, Sohu's total revenue reached US$51.5 million, an increase of 46 percent year-on-year. Advertising revenue grew 42 percent to US$29.8 million while online game revenue jumped 473 percent, hitting US$12.7 million.

"We are very glad to see our years of efforts in online gaming pay off at last," said Charles Zhang, Sohu's chairman and CEO. "We regard online gaming as Sohu's long-term strategy and will increase our investment in this area in the future."

Sohu's startling growth in online gaming in the past four months has mainly been driven by Tian Long Ba Bu, a role-playing game that Sohu introduced in May. It has gained US$10.9 million in revenue in the quarter and is expected to secure US$15 million to US$16 million in the next four months.

"By the end of next year, we expect to launch our new game Lu Ding Ji," said Wang Tao, in charge of Sohu's online game business. "We are also looking for opportunities to cooperate with other game developers from home and abroad to release more games in the following years."

As one of China's most visited news portals, Sohu's online game strategy can be traced to 2003, when the company launched its first online game Qi Shi, which ceased operation this March because of a dispute with a South Korean developer. The company's second game, Dao Jian, launched in 2004, was not very successful either.

Wang said Sohu's success in Tian Long Ba Bu, which is the company's third game, has given Sohu solid ground for further development in China's online game market, where sales may rise to 9 billion yuan from 7.2 billion yuan this year, according to government figures. He said Sohu is planning to release two new games every year in the future.

Online gaming is China's single-largest market and one of the country's fastest growing sectors in the booming Internet industry, sustaining rapid growth of many Chinese companies such as Shanda, Perfect World, Kingsoft and Giant Interactive Group (which will be listed on the New York Stock Exchange tomorrow).

According to a report from Credit Suisse in July, China's online game market is expected to grow at an annual average rate of 11 percent from 2007 until 2017.