With its eyes on the prize of a vast potential customer base, Japan's Sega Corp. has started its advance into the Chinese market by opening the first of a chain of game arcades in Shanghai. Covering 129,166 square feet (12,000 square meters) at a department store operated by the Chinese company, the arcade has six zones where game fanatics can try out the latest releases, and where new titles generated specifically for the Chinese market will make their debut. A Gehua affiliate will operate a Web site that licenses some of Sega's online games to tap the increasing ranks of online gamers among China's 111 million Internet users.

Subscribe to the Hollywood Reporter and see the entertainment industry from its best angle: the inside looking out. Complete access to real-time news and exclusive analysis that goes behind the scenes from film to television, home video to digital media.

   Subscribe now.