More than a dozen NetEase studios are reportedly at risk, including Nagoshi, Quantic Dream and Grasshopper
The Chinese publisher has reportedly decided to divest from its international studios
Numerous NetEase studios, including Quantic Dream, Nagoshi Studio, and Grasshopper, are reportedly at risk of closure after the Chinese publisher decided to divest its international operations.
Previously known for its popular PC MMOs and mobile games, NetEase has expanded significantly in recent years, acquiring and establishing studios from industry veterans in Japan, North America, and Europe. However, as the games industry continues to endure turbulent times, there have been signs that, in recent months, it could be scaling back its ambitions.
Last month, it was confirmed NetEase had split from Vancouver-based Worlds Untold, the studio it founded with Mass Effect writer Mac Walters in 2023, as well as Seattle-based Jar of Sparks, the studio founded in 2022 by Xbox veteran Jerry Hook.
Then, earlier this week, it was confirmed that NetEase had laid off US-based developers behind Marvel Rivals, including its director, despite the game enjoying a hugely successful launch.
A NetEase spokesperson denied to Venturebeat that these cuts were part of a broad scaling back of its international game development. However, now Game File sources claim the publisher is indeed significantly scaling back, and is actively shopping around its non-Chinese studios.
One of Game File’s sources claims that NetEase plans to divest itself of the majority of its overseas teams, which could lead to the closure of more than a dozen game studios, if they can’t secure new funding.
That could include Japan-based studios from Like A Dragon designer Toshihiro Nagoshi, and Resident Evil producer Hiroyuki Kobayashi, as well as Suda 51’s Grasshopper Manufacture. NetEase also set up Studio Flare, with former Marvelous board member Toshinori Aoki and Blazblue series producer Toshimichi Mori, and launched Pincool, a new studio led by Dragon Quest 8 and 9 producer Ryutaro Ichimura.
In the West, NetEase owns Detroit studio Quantic Dream, and new studios from Call of Duty designer David Vonderhaar, Control’s lead designer, and more, and it has invested in GTA lead Leslie Benzies’ Build a Rocket Boy.
A NetEase spokesperson declined to comment to Game File on the supposed cuts, but said that “all studios and projects are in constant review and evaluation, and NetEase will determine changes needed to be made throughout that process.”
According to an earlier Bloomberg report, NetEase studios in Japan, including Nagoshi Studios, “have been given time to wrap up ongoing projects” but are not receiving any more funding.
VGC visited Nagoshi Studio and Grasshopper Manufacture in 2023, when both developers expressed their belief that they’d gained creative freedom from their deals with NetEase.
“The general environment [in this country] means it’s hard to try new things in Japan, but NetEase is very ambitious and wants to expand its business by succeeding worldwide and including the console game category, which aligns with our ambition,” Nagoshi told VGC.
NetEase’s studio roster
- NetEase Montreal (Watch Dogs creator Jonathan Morin)
- Quantic Dream (Heavy Rain / Detroit)
- Grasshopper Manufacture (Suda51)
- Nagoshi Studio (Toshihiro Nagoshi)
- Pincool (Dragon Quest 8 & 9 producer Ryutaro Ichimura)
- Studio Flare (BlazBlue producer Toshimichi Mori)
- GPTRACK50 (Resident Evil 4 producer Hiroyuki Kobayashi)
- Jackalyptic Games (City of Heroes / DC Universe Online head Jack Emmert)
- T-Minus Zero Entertainment (Star Wars: The Old Republic producer Rich Vogel)
- Bad Brain Games (Watch Dogs: Legion / Driver: San Francisco producer Sean Crook)
- Anchor Point Studios (Control lead designer Paul Ehreth)
- SkyBox Labs (Support for Halo, Age of Empires & Minecraft)
- Spliced (Grand Theft Auto, Call of Duty alumni)
- Fantastic Pixel Castle (remote studio)
- Liquid Swords (Avalanche Studios co-founder)
- Rebel Wolves (Witcher veterans)
Earlier this week, NetEase announced that its games and related services net revenues were RMB21.2 billion (US$2.9 billion) for the three months ended December 31, an increase of 1.5% compared with the same quarter of 2023.
The company’s full statement regarding the Game File story follows:
The company continues to invest in our global business and actively recruits and nurtures talent. At the same time, organizational structure changes aimed at improving performance are a necessary part of our ongoing growth.
NetEase Games has a clear understanding of our development trajectory and areas of strength. Many of our strategic decisions are firmly grounded in these core areas. Since the launch of Westward Journey Online in 2001, NetEase has accumulated over 20 years of experience in developing and operating online service games. The success of Marvel Rivals further affirms the value of this experience.
At the same time, we acknowledge that we are still in the early stages of exploring single-player game development and operations. This makes us more cautious when evaluating such products and assessing the associated risks and opportunities, particularly in today’s fast-changing and highly competitive environment.
[CEO] Mr. Ding stated on the recent earnings call that NetEase is committed to supporting really high quality studios and master creators. That is the company’s strategy, and there is no change in this plan. For any studio globally, it behooves us as a responsible commercial business to frequently evaluate the progress, viability, and potential for success of our products and teams.
