Gamers in China will be paying more than $3bn a year to play online by 2010, according to new forecasts.

The online games market in the world's most populous nation was worth $1.66bn last year, US-based Pearl Research reported.

"A key trend to track in 2008 is rising average revenue per user," said Pearl Research managing director Allison Luong.

"Certain online games are reaching $7 to $12 a month in average revenue per user, significantly higher than past averages of $5 or less per month.

"There is still room for average revenue per user to grow, as game operators enhance monetisation efforts from free-to-play games."

Many online games in China can be played for free, generating income on the sale of virtual items such as weapons and gold for use in the game.

Some web portals also use casual games to draw an audience from which they can profit via advertising.

"Chinese-themed and advanced casual games are expected to drive revenues in 2008 and beyond," Luong added.

"2007 exceeded expectations with growth of more than 60 per cent, driven by compelling and diverse content, free-to-play games and rising demand for leisure and technology products."

Two massively multiplayer online games, Netease's Fantasy Westward Journey and Giant Interactive's controversial Zhengtu Online, now claim more than 1.5 million simultaneous players at peak times.

Several games operators announced plans in 2007 to list on stock markets as revenues rose. Revenues at Giant Interactive and Perfect World rose by 274 per cent and 593 per cent respectively.