By Rhee So-eui and Michael Wei
Reuters

SEOUL/BEIJING–Flush with cash from IPOs and a lucrative online game operating business, Chinese companies are trying to expand into game development, breaking free from their dependence on foreign titles and boosting incomes.

After long relying on foreign hit games such as U.S.-based Activision Blizzard’s “World of Warcraft” (WOW) and “Kartrider” from South Korea’s Nexon, China now wants to develop its own blockbusters and eventually lead the fast-growing market.

It may be a while before China overtakes South Korea, which dominates Asia’s online gaming market, but there are growing signs that Chinese firms such as Netease.com and Tencent are now in a strong position to compete globally and are catching up with rivals quickly.

Successful online games can generate earnings for years from monthly service fees, character customization and other micro-transactions and carry higher margins than classic console games. Developing games in-house also reduces uncertainties over license contracts and renewals.

“We consider in-house development a sound business model, which brings relatively high margins,” said Phyllis Sai, spokeswoman for Nasdaq-listed Chinese game firm The9.

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