China’s online game industry grew 25% to $5 billion in 2010, according to the latest Online Games in China report from Pearl Research. The report forecasts that China’s online game market will exceed $8 billion by 2014. Top Chinese game operators in China by revenue in 2010 were Tencent with $1.4 billion, Netease with $749 million, Shanda Games with $680 million, Perfect World with $374 million, and Changyou with $327 million. In addition, the game operator Shenzhen ZQ completed its IPO on the Shenzhen Stock Exchange, becoming the first domestically traded game operator in China.
Although Shenzhen ZQ is not a top five game operator by revenue, the company was established in 2003 and still employs over 700 people. In 2011, Pearl Research expects to see top Chinese game operators invest in merger and acquisition activities that grow their overseas presence and strengthen their development capabilities. This trend began to emerge in 2010, with Tencent investing $300 million in Digital Sky Technologies, a company that itself is a major investor in Zynga and Facebook.