Netease has reported strong profits after a popular game attracted a peak audience of more than 1.5 million simultaneous players at the end of last year.

The Chinese online games operator and web portal said that total unaudited revenues for 2007 reached $316.1m. Net profit hit $173.3m over the year.

Online games were the biggest cash generator, responsible for $264.1m of the revenues for the year.

While Netease operates several popular games, the company's biggest hit remains Fantasy Westward Journey, which was launched in early 2004.

"As fiscal 2007 drew to a close, peak concurrent users for Fantasy Westward Journey hit an all-time high allowing us to conclude the year on a decidedly positive note," said chief executive William Ding.

The company's games have traditionally relied on a subscription-based payment model which has proved a hard sell in the face of competition from other games which are free to play and generate revenue by sales of in-game items.

"We believe that the ongoing diversification in our product offerings, including an intensified focus on item-based games and strategic licensing opportunities, will allow us to attract a larger array of players and further solidify our leading position in the Chinese MMORPG market in 2008 and beyond," said Ding.

Like its competitors, Netease is looking to the summer Olympic Games for an advertising-driven revenue boost.

"As the world turns its attention to Beijing we remain focused on capturing domestic market share and building capacity to capitalise on our enhanced marketing initiatives related to our advertising service business," Ding concluded.