Charles Zhang, chairman and chief executive officer of the NASDAQ-listed portal, said profits from online gaming should make up at least 10 per cent of the company's overall revenue. Otherwise, he said: "It will not be worth our investing in it, so our bottom line is 10 per cent or above."

Sohu released the Chinese version of Knight Online, a three-dimensional online role-playing game developed by the South Korean firm WizGate Corp.

Zhang said online games would become a core section of Sohu's consumer business, which includes its short message service for mobile phones and online shopping.

Under its agreement with WizGate, Sohu will act as the South Korean firm's general distribution agent in China and take charge of production, marketing and services.

Sohu has formed a team of 50 staff members to develop its online gaming business.

China Netcom, the country's second-largest fixed-line telecom operator, will become Sohu's partner, hosting the game's server and providing a nationwide network.

Zhang said more than 10,000 people played the game simultaneously during public testing in Taiwan. The game will be released commercially in the second quarter of this year.

The Chinese research firm CCID Consulting Co Ltd has forecast that the online gaming market will be worth 1.35 billion yuan (US$163 million) this year, up from last year's 700 million yuan (US$85 million). The number of players will increase from 9.3 million to 14.3 million, it predicted.

However, some analysts sounded a note of caution about the enthusiasm for online games.

(China Daily February 26, 2003)