SHANDA Games will invest heavily to produce and distribute computer-graphic movies based on its games as the game developer expands into the film industry, marking a key step in its long-term "online Disneyland" vision, the Shanghai-based company said yesterday.

Shanda Games' 18-fund, an investment arm, with raised funds totaling 1 billion yuan (US$157 million), focusing on game and other entertainment sectors, was also launched yesterday in Suzhou, aiming to establish itself as an entertainment industry base.

With this, Shanda has joined the wave of game-and-film convergence, pioneered by firms such as Beijing-based game developer Kylin, which invested in producing "Painted Skin 2," the country's highest grossing local film so far this year.

Shanda's first film "Dragon Nest: Rise of the Blackdragon," based on the popular Shanda-licensed title Dragon Nest, is produced by Mili Pictures with an investment of 40 million yuan for initial development. Hewlett-Packard, the world's biggest PC maker, will provide hardware support for the film.

"Shanda has a natural advantage for cross-industry expansion thanks to its rich resources," said Alan Tan, chief executive of Shanda Games.

At present, Shanda's business range covers online games, literature, video, cloud computing, e-book reader and the newly-launched mobile phone.

Shanda, however, is not the first company to go in for such cross-industry expansion.

"Painted Skin 2," invested by Beijing Kylin Information Technologies, drew box-office income of more than 700 million yuan, No. 1 up to now this year, in the domestic market.

Kylin said recently that a new online game with the same title, with designs of characters and scenes from "Painted Skin 2," will debut in September.

The cross-industry expansion is expected to help game developers improve their revenue and profitability, but in the long run, industry insiders said.