NetEase Halts JPY 7B Game, Slashes Nagoshi Studio Funding

Edgen Stock·Mar 09 2026, 02:32

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Key Takeaways

NetEase is ceasing its investment in Nagoshi Studio, a move that halts the development of the high-profile game "Gang of Dragon" due to escalating costs. The decision, which triggered a nearly 4% drop in NetEase's stock, signals a strategic re-evaluation of its spending on ambitious, long-term AAA game projects.

NetEase will cease all funding for Nagoshi Studio beginning in May, a decision communicated to employees on March 6th.
The primary driver was a JPY 7 billion (approximately HKD 347 million) additional investment required to complete the studio's flagship project.
Investors reacted negatively, with NetEase's stock (09999.HK) falling 3.86% as the news raised concerns about its global expansion strategy.

NetEase Balks at JPY 7 Billion Cost for New Game

Chinese technology firm NetEase is pulling its financial backing from Nagoshi Studio, founded by the creator of the popular "Yakuza" series. The company informed studio employees on Friday, March 6th, that all investment would stop in May. The decision stems from an internal evaluation that the studio's debut project, "Gang of Dragon," required an additional JPY 7 billion (around HKD 347 million) to complete. This abrupt withdrawal puts the future of the highly anticipated game in jeopardy and marks a significant reversal in NetEase's funding for the high-profile developer.

Shares Drop 3.86% on Global Strategy Concerns

The market registered immediate disapproval of the strategic pivot. Shares of NetEase (NTES-S) fell 3.86% after the announcement, reflecting investor concern over the company's commitment to developing major AAA titles for the global market. The move to cut costs on a long-term, high-risk project is being interpreted as a more conservative capital allocation strategy. The significant short-selling volume of $642.68 million further underscores a bearish sentiment, questioning the viability of NetEase's expensive ventures into new game franchises.