NetEase.com Inc's billionaire founder, William Ding, plans to use US$420 million to develop online games and for acquisitions as competition increases.

The maker of video games including Fantasy Westward Journey aims to strengthen its product range and advertising sales over "a couple of years" with the spending, said Ding, 34, whose fortune was estimated by Forbes magazine in November to be worth US$1.27 billion.

"The company needs to expand to keep ahead of competition as well as diversify to minimize risk from potential regulation," said Edward Yu, chief executive of Analysis International, a Beijing-based market researcher.

Local rivals such as Shanda Interactive Entertainment Ltd started offering free games, threatening the pay-to-play market share of Beijing-based NetEase, which has not released a new title in two years.

"NetEase games are quite suitable for youths," Ding said in a February 24 interview.

Ding said he supports greater regulation of content in the online games market, which he forecasts will grow sixfold to 17.2 billion yuan (US$2.1 billion) by 2010. NetEase began an experimental time limit last year on some games, cutting points players may earn after spending more than three hours online.

NetEase plans this year to introduce two titles, Big Tang and Under the Heavens, both martial arts games featuring characters from Chinese history and mythology. More than 1.5 million people play the two main versions of Westward Journey a day.

"NetEase has a good model in that its games are focused on traditional Chinese culture and are less violent," Yu said.

Ding, China's third-richest person, founded NetEase in 1997 as the nation's first free, dual-language e-mail service with 20 employees, drawing on his background as a communications engineer for China Telecommunications Corp, the nation's biggest telephone company. He currently employs 1,600 and has offices in Beijing, Shanghai, Guangzhou and Hangzhou.

NetEase's profit more than doubled in 2005 to 932 million yuan (US$116 million) on sales that rose 76.8 percent to 1.69 billion yuan (US$210.3 million).

Revenue from the online games division rose 119 percent. The company is also expanding in Internet advertising, earning 241.2 million yuan (US$30 million) in 2005, up 41 percent from a year earlier.

(China Daily March 4, 2006)