China plans to spend up to two billion yuan ($242 million) to develop homegrown online games, a government official said on Monday, in a bid to grab market share from more popular Japanese and South Korean games.
The news comes as foreign software developers, who provide most of the games for the booming sector, complain about growing regulatory hurdles in China, a market expected to be worth more than $800 million by 2008.
"At present, the most popular online games are mainly from Korea and Japan, so our bureau will develop online games from China," an official from the Press and Publication Administration told Reuters.
"We will promote games developed by Chinese firms. We want our youth to experience traditional Chinese culture and education when they're playing online games," said the official, who declined to give his name.
The administration, along with two other ministries, are responsible for regulating the free-wheeling online game sector, whose colourful epics have captured the eyeballs and wallets of tens of millions of Chinese.
Paul Waide, managing editor of Shanghai consultancy Pacific Epoch, said regulators had not approved any foreign-developed games for the last two months, prompting a frenzy of speculation about a possible crackdown.
"This is highly unusual in a sector that is just going crazy," he said.
Two of China's most popular online games, in which players can choose from a zoo of characters to fight against tens of thousands of other characters, are both developed in South Korea.
PREFERENTIAL TREATMENT
The Chinese vendors of the "Legend of Mir" and "MU", for example, pay licensing fees to the original developers. Games developed in China account for only 10 percent of the domestic market, state media has reported.
The official Xinhua news agency said the administration's investment would go towards developing 100 online games in the next four years. Local developers would be given preferential policies in taxation and financing, it said.
The move appears to benefit companies such as NetEase.com and China's biggest online game firm, Shanda Networking Co. Ltd., which has been trying to develop its own portfolio.
Shanda initially became well-known in China for bringing "Legend of Mir", developed by South Korean firm Wemade, to eager players.
It was unclear if foreign firms such as Electronics Arts Inc., the world's largest video game publisher, that develop games in China would also be eligible for preferential treatment. ($1=8.276 Yuan)