Abdelrahman
Several studios under the NetEase umbrella, including Quantic Dream, Nagoshi Studio, and Grasshopper, are reportedly facing potential shutdowns as the Chinese gaming giant decides to offload its international ventures.
Once celebrated for its engaging PC MMOs and mobile games, NetEase has made significant expansions in recent years, acquiring and establishing studios led by industry veterans across Japan, North America, and Europe. Nevertheless, with the gaming industry facing ongoing challenges, signs suggest that the company might be reconsidering its expansion strategies.
As of last month, it was confirmed that NetEase had parted ways with Worlds Untold, a studio created in collaboration with Mass Effect writer Mac Walters in 2023, as well as Seattle’s Jar of Sparks, established by Xbox veteran Jerry Hook in 2022.
Earlier this week, it was also reported that NetEase had let go of developers in the US team responsible for Marvel Rivals, including its director, despite the game’s strong launch performance.
A spokesperson for NetEase refuted claims made to Venturebeat that these staff reductions were indicative of a wider strategy to downsize its international game development efforts. However, sources from Game File assert that the company is indeed scaling back significantly and is actively seeking to divest its non-Chinese studios.
One insider indicated that NetEase plans to divest most of its overseas teams, potentially leading to the closure of over a dozen studios if new financing cannot be secured.
This could potentially involve studios in Japan headed by Like A Dragon designer Toshihiro Nagoshi and Resident Evil producer Hiroyuki Kobayashi, along with Suda 51’s Grasshopper Manufacture. Additionally, NetEase launched Studio Flare, spearheaded by former Marvelous board member Toshinori Aoki and BlazBlue series producer Toshimichi Mori, and also established Pincool, which is led by Dragon Quest 8 and 9 producer Ryutaro Ichimura.
In North America, NetEase oversees Quantic Dream, based in Detroit, as well as new studios founded by Call of Duty designer David Vonderhaar and the lead designer of Control, among others. The company has also invested in Leslie Benzies’ Build a Rocket Boy, the studio behind the upcoming GTA rival.
A spokesperson from NetEase refrained from commenting directly to Game File on the reported layoffs but emphasized that “all studios and projects continually undergo review and evaluation, with adjustments made based on this process.”
According to an earlier Bloomberg report, Japanese NetEase studios, including Nagoshi Studios, “have been asked to complete current projects” but will not receive further funding.
VGC’s visit to Nagoshi Studio and Grasshopper Manufacture in 2023 revealed that both developers felt they had gained creative autonomy through their partnership with NetEase.
“The general environment [in Japan] often makes it challenging to innovate, but NetEase is ambitious and aims to broaden its reach globally, including venturing into the console game market, aligning with our aspirations,” Nagoshi stated during the visit.
Notable Studios Under NetEase
- 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)
This week, NetEase announced that its net revenues for games and related services reached RMB21.2 billion (approximately US$2.9 billion) for the three months ending December 31, a modest growth of 1.5% compared to the same quarter the previous year.
In their complete statement regarding the situation with Game File, the company mentioned:
NetEase is committed to investing in its global business while actively recruiting and nurturing talent. Additionally, organizational changes aimed at enhancing performance are key to our growth strategy.
NetEase Games possesses a strong understanding of its development path and core strengths. Many strategic decisions are grounded in these areas. With over 20 years of experience in the development and operation of online service games since the launch of Westward Journey Online in 2001, the success of Marvel Rivals further validates this expertise.
While we recognize that our exploration into single-player game development is still in its infancy, we approach such projects with caution, especially in today’s rapidly evolving and competitive market.
[CEO] Mr. Ding stated during the recent earnings call that NetEase remains dedicated to supporting high-quality studios and master creators. This strategy remains unchanged. As a responsible business, it is vital for us to regularly assess the progress, viability, and potential for success of our products and teams across the globe.
