NetEase Inc will cut off funding to the studio led by Yakuza franchise creator Toshihiro Nagoshi, the latest to be affected by the Chinese company’s broader strategy to shrink game development activities.
Employees of Nagoshi Studio Inc were told of the decision on Friday, according to people familiar with the situation. A NetEase spokesperson confirmed to Bloomberg it will stop financing the studio from May.
Nagoshi Studio’s impending closure underscores the struggles of a broader gaming industry that surpasses Hollywood in revenue, yet in recent years has faced growing competition from alternative entertainment outlets such as social media.
Nagoshi Studio was created in 2021 after Toshihiro Nagoshi, one of Japan’s most famed game creators, decided to leave Sega Sammy Holdings Inc and go independent. NetEase and Tencent Holdings Ltd, which were both actively recruiting Japanese gaming talents for their expansion overseas, competed for Nagoshi at that time.
NetEase began cutting its game investments in recent years under founder and Chief Executive Officer William Ding’s initiative, leading to job cuts and studio closures around the world. In Japan, Ouka Studio – a team that pioneered NetEase’s overseas push - was closed in late 2024, while Nagoshi Studio was given time to complete its first game in development.
The studio unveiled a teaser for its first game, Gang of Dragon, in December. But the decision to stop sponsorship before the game is released came after NetEase discovered additional funding of at least ¥7bil (US$44.4mil/RM176mil)) would be needed for the project to be completed, one of the people said, asking not to be identified because the information is private.
Nagoshi is trying to find new sponsors without success so far, the people said. The studio is in discussions with NetEase on the handling of game materials already developed, they said.
The studio has been informed by NetEase that while it’s free to continue on its own, it must bear the corresponding costs if it wants to keep the assets or brand, the people said. NetEase is only open to negotiations if the studio can pay its way out, they said.
The NetEase spokesperson did not give details on the exit terms of Nagoshi Studio. – Bloomberg
