'I had to give my computer away because the game is just so tempting that whenever I see my computer I can't help it,' said 19-year-old Mr Hong. 'Some of my peers play around the clock. Almost everyone who has a computer here plays online games.'

Although Mr Hong has quit the online world, there is little for operators such as Shanda Networking and The9 to worry about. According to market researcher International Data Corp (IDC), China had 13.12 million online gamers last year and the number is growing at explosive rates.

IDC expects the mainland market to expand 37.3 per cent annually until 2007, when the number of players is forecast to reach 40.4 million.

Mr Hong's online habit cost him more than just lost time. He spent between 30 yuan and 40 yuan a month on pre-paid access cards, making him a typical player in China. His expenses would have been more were it not for the free internet connection provided by his university.

'Some of the people I know pay up to 1,000 yuan a month playing online games in internet cafes,' he said.

According to IDC, subscription revenue, estimated at US$148.3 million last year, is forecast to grow 30.6 per cent annually until 2007. By then, the market is expected to be worth $356.8 million.

Figures from DBS Vickers Securities are more optimistic. The brokerage estimates the mainland market was worth two billion yuan last year and forecasts growth of 65.6 per cent annually until 2006.

Numbers like these make a compelling investment story for Shanda and The9, both of which are planning Nasdaq listings.

There are already listed gaming plays. Since the beginning of the year, the Shenzhen-listed A shares of Searainbow Holding have climbed 75.97 per cent.

Impressive stock gains - combined with hyper-growth projections for the industry - have drawn the attention of companies other than pure game operators.

Fixed-line carrier China Telecom has launched ChinaVnet to invest in game start-ups. Kingsoft, frustrated by rampant piracy of its business software titles, has found the pay-to-play model more to its liking. Its JX Online title had 80,000 concurrent users in January.

In fact, as DBS notes, piracy actually helps online game operators by providing a distribution network for their software. Players must still buy pre-paid cards to access an operator's servers.

Many of the titles favoured by players such as Mr Hong are multi-player, role-playing fantasies. The games play out in a feudal world created around Chinese history and mythology, with more than 70 per cent coming from South Korea.

About 70 per cent of mainland players are male - the 'sword fighting' genre dominates China's market - but the number of women gamers is increasing.

Jiang Kan, 26, an industrial designer with a mobile-phone company, is a fan of Pao Pao Tang, a Korean title operated by Shanda that targets women.

'I guess this is the most popular online game among girls because it looks cute and is less violent. And that's why I love it,' Ms Jiang said.

DBS analyst Wallace Cheung offers several theories to explain the popularity of online games. He said China's one-child policy had deprived young people of opportunities to interact with others their own age and online games filled this void.

He also said Asians were shy when it came to meeting members of the opposite sex. 'Dating in the virtual community or online games is less embarrassing than dating in real life.'

But winning in the mainland online-game market is as challenging as the games themselves. Of the top 10 most popular games last year, just four were developed by Chinese companies - leaving operators dependant on foreign developers, to whom they pay rich licence fees and royalties.

Licence fees start at about US$1 million and have been climbing as mainland operators, attempting to expand their offerings, bid up prices. A licence can cost operators between 25 per cent and 44 per cent of their revenue.

Mainland operators, however, have been allocating more resources to develop games of their own.

Last month, Shanda unveiled a self-developed title, The Sign, which is presently being tested. Working to its advantage are low development costs in China, which range between 15 million yuan and 20 million yuan per title.

But mainland operators still must overcome the perception that their games are inferior to foreign titles.

'I would like to try the [China] developed ones, but they are far less sophisticated,' Mr Hong said. 'The image quality is not as good and the operation design is worse.'

Still, if mainland companies can draw players to home-grown content, they stand to reap big profits. According to DBS, operators running their own games can break even after attracting just 20,000 concurrent users, compared with 25,000 for licensed titles.

From there, benefits conform to scale. For every 1 per cent increase in the number of concurrent users, pretax profit climbs 1.7 per cent to 2.5 per cent, DBS estimates.

But while it is fun and games for this new breed of technology firm, some in the industry have doubts.

'Who has the time to play these games?' asked Ali Toure, a marketing manager at ASTI, a software solutions provider. 'They are teenagers after they have graduated from school, students, the unemployed and people who live off their families. If you have a normal job and family, when can you play?'