ANALYSIS - Aggressive China online game firms eye global crown

By Melanie Lee

SHANGHAI (Reuters) - Armed with cash from recent listings, Chinese online game makers are gearing up to play in Western markets, challenging industry leaders Electronic Arts and Activision Blizzard on their home turf.

Having prospered at home, companies such as Changyou and Shanda Games want to take a page from China's export machine in sending their wares abroad.

Changyou, which raised $120 million in an April Nasdaq IPO, is in the final testing stage for its martial arts multiplayer online game, Dragon Oath, for the U.S. market, making a commercial launch in end of 2009 or early 2010 probable. The company began testing the game in Europe in August.

Many U.S. gamers still prefer consoles such as Microsoft's Xbox and Sony's PlayStation to online play.

However, analysts said a slow but sure shift towards online gaming, which allows for flexible formats, multiple players and can be played at any Internet terminal or mobile phone, is taking place and will benefit Chinese online game developers.

"The Western markets are changing, it is a console-driven market but I think MMOs (massively multiplayer online) games are the next wave," said Atul Bagga, an analyst at research firm ThinkEquity.

"EA and Take Two Interactive are strong on the console side but online gaming is a very different animal."

With more than 50 million online gamers, China is expected to corner more than 40 percent of the global market by 2011, according to research firm Samsung Securities.