Giant Interactive and Tencent Literature yesterday announced plans to work together to produce computer games based on popular Internet novels.

The companies' first project will be the simultaneous release of a game and online novel titled Ze Tian Ji, which is based on a Chinese legend.

"Good stories and IP (intellectual property) have their own values for game fans and readers," said Peng Cheng, vice president of Giant.

Tencent will invest more than 100 million yuan (US$16.2 million) in online literature this year to attract more star names like Mao Ni, the author of Ze Tian Ji, said Wu Wenhui, Tencent Literature's chief executive.

Revenue from online games in China topped 54.9 billion yuan last year, with the market led by Tencent, NetEase and Shanda, according to research firm Analysys International.

News of the cooperation between Giant and Tencent came ahead of the 12th China Digital Entertainment Expo & Conference 2014, which opens tomorrow in Shanghai and is China's largest trade show for digital entertainment.