With handsets increasingly popular in the country and with subscribers already making full use of services such as SMS, China's mobile phone operators are growing anxious to develop new profit lines.

The new direction that many companies are turning to is mobile phone games. Although the games are currently just known to young new-tech enthusiasts, industrial analysts predict there could be more than 1 million players by the end of 2004. Analysys International, a domestic market research firm in Beijing, forecasts the mobile game market will reach about 600 million yuan (US$72 million) this year, the China Daily reported Saturday.

"Mobile games will become another gold mine for telecom operators and service providers," Zhang Ying, a senior telecom analyst with Analysys International, was quoted. Zhang said the emphasis of the two Chinese mobile operators–China Mobile and China Unicom–on data services will be a big driving force for mobile games. The two companies, both with more than 100 million subscribers, have been seeing a slowdown in both the number of subscribers and the average revenue per user. And at the same time, the prices of their voice services have also fallen sharply due to fierce competition.

SMS, a key data application, also appears to have slowed down after more than three years of high growth, suggesting that new services like mobile game will become increasingly important for both operators and service providers. While mobile games based on SMS had the dominant share in the mobile game market last year with 300 million yuan (US$36 million) in revenue, new games on 2.5-generation platforms like WAP, JAVA and BREW, showed strong momentum this year.