NetEase Suspends Operations of Gang of Dragon Dev. Nagoshi Studio

Chinese gaming company NetEase Inc. has decided to suspend the operations of Nagoshi Studio, the Tokyo-based development team behind Gang of Dragon. NetEase will stop funding the studio from May 2026, Bloomberg reported.

Bloomberg also reported, citing an anonymous source, that the decision came after NetEase found that Nagoshi's upcoming title required an additional ¥7 billion ($44.4 million) in funding. Gang of Dragon, helmed by Yakuza franchise creator Toshihiro Nagoshi, was announced at The Game Awards 2025. No release date was announced.

According to people familiar with the matter, NetEase has told Nagoshi Studio representatives that the studio can keep operating if it can pay for the assets and brand. The studio is currently trying to negotiate with the company to recover already-developed game materials.

Nagoshi is reported to be in talks with other investors to save the studio, but has had no success so far. He founded the studio in November 2021 after leaving Sega. At the time, both Tencent and NetEase competed to recruit the industry veteran as part of their push to expand game development capabilities outside China.

Nagoshi Studio Wind Down Reflects NetEase’s Changing Global Strategy

NetEase, the developer and publisher behind Marvel Rivals and Destiny: Rising, has been reducing spending on experimental projects and external studios as development costs rise across the industry, according to Bloomberg.

The company spent heavily in the early 2020s to build international development capabilities, launching or investing in studios across Japan, Europe, and North America. But it shut down Japan-based Ouka Studio in 2024. A string of closures followed, including Bad Brain, Fantastic Pixel Castle, and Worlds Untold. T-Minus Zero Entertainment survived only after its founders reacquired the studio in November 2025.

The pullback is not unique to NetEase. Major publishers began cost-cutting in 2023 after a pandemic-era spending surge. Microsoft, Amazon, Sony, and Electronic Arts have all closed studios or scaled back development over the same period.