Revenue from China's online game market grew 39.5 percent in the second quarter from the previous year to 6.18 billion yuan ($906 million), according to data from research firm Analysys International on Tuesday.
Tencent Holdings, which runs China's largest online messaging platform and operates popular free-to-play games domestically, emerged as the market leader with 20.2 percent of the market and 1.24 billion yuan in revenues.
Shanda Games, a unit of Shanda Interactive Entertainment, had 20 percent of the market with 1.23 billion yuan in revenues. NetEase.com, whose tie-up with Activision Blizzard to operate the blockbuster game World of Warcraft in China has hit speedbumps with regulators, was in third place with 12.7 percent of the market and revenues of 780 million yuan.
China banned on Saturday foreign investment in its lucrative online games industry in an effort to tighten control over its virtual worlds.
China's online gaming market is one of the world's fastest growing, with sales expected to rise 30 to 50 percent this year to 24 billion-27 billion yuan ($3.5 billion-$4 billion) according to an industry regulator.
(Reporting by Melanie Lee; Editing by Jonathan Hopfner)