SHANGHAI China's online game revenues are expected to hit 73.1 billion yuan ($10.7 billion) in three years, driven by growing Internet penetration in the world's most populous country, a research firm said in a report released Thursday.
China's Internet penetration is around 27 percent according to the latest government data, compared to over 70 percent in more developed Asian neighbors South Korea and Japan.
Industry revenues are expected to hit 26 billion yuan ($3.8 billion) this year and grow by an average of 41.2 percent over the next three years, said Beijing-based research firm Analysys International.
By 2012, China's online game sector will have 230 million online gamers compared with 69 million currently, and rake in revenues of 73.1 billion yuan, it said.
Major players in the sector include Tencent Holdings, Shanda Games and NetEase.com.
Despite the bullish outlook, regulatory risks pose significant overhang for online gaming plays as China steps up oversight of the booming sector, limiting foreign investment and tightening regulations.
(Reporting by Melanie Lee; Editing by Jonathan Hopfner)