NetEase Inc. is pulling financial support from Nagoshi Studio Inc., the development house founded by famed Yakuza series creator Toshihiro Nagoshi. The Chinese tech giant confirmed that funding will officially halt in May, placing the studio's future and its inaugural project, Gang of Dragon, in jeopardy.
The decision comes after NetEase determined that the studio's first game required an additional investment of at least 7 billion yen (approximately $44.4 million) to reach completion. According to sources familiar with the situation, employees were informed of the funding cut on Friday.
A Strategic Retreat
The withdrawal aligns with a broader cost-cutting initiative led by NetEase founder and CEO William Ding. The company has been actively shrinking its global game development footprint, a strategy that previously resulted in the closure of Ouka Studio in late 2024.
Nagoshi Studio was established in 2021 following Toshihiro Nagoshi’s departure from Sega Sammy Holdings. At the time, both NetEase and Tencent were aggressively competing to recruit top-tier Japanese talent for overseas expansion. Despite the hype surrounding the studio's formation, the release of a teaser for Gang of Dragon in December was not enough to secure continued backing without the request for substantial extra capital.
Uncertain Future
Currently, the studio is reportedly struggling to find new sponsors. NetEase has stated that while Nagoshi Studio is free to continue operating independently, it must bear the costs associated with retaining developed assets and branding. Negotiations regarding the handling of existing game materials are ongoing between the two parties.
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