REVENUE in China's online game market grew 24.7 percent year on year in the fourth quarter of 2010, with market leader Tencent expanding its share in the period, a research firm said yesterday.

The game market, however, will grow at a slower rate this year because of fierce competition and lack of blockbuster titles, said iResearch, a Shanghai-based information technology consulting firm.

In the fourth quarter, the introduction of more game titles, including NetEase-operated the World of Warcraft, boosted the domestic game market revenue to 9.05 billion yuan (US$1.37 billion), a growth of 5.8 percent from the earlier quarter, according to iResearch.

Tencent, China's No. 1 Internet firm by the market value, expanded its share of the domestic market to 31 percent by the end of 2010, said iResearch, without providing its market share in the third quarter. NetEase was No. 2 with 15.5 percent market share, followed by Shanda's 12 percent, according to iResearch.

The top three game firms took a combined share of 58.5 percent of the domestic market, which put pressure on smaller game firms and forced them to sell or control costs to survive, iResearch said.

Following NetEase's success with World of Warcraft, other new "hits," including Blade & Soul and Duke of Mount Deer, may help lift earnings and share prices for Tencent, Sohu and Perfect World in 2011, according to a report released by Morgan Stanley yesterday.

But the market's growth in revenue is set to slow from the 30-50 percent annual rise in past years, iResearch said.

In a separate report, iResearch said China's online search market revenue reached 3.29 billion yuan in the fourth quarter.