Chinese gaming giant NetEase is preparing to significantly reduce its international presence by selling or potentially closing many of its foreign game development studios, even as its new game Marvel Rivals achieves remarkable success.
The company's latest hit, Marvel Rivals, attracted 40 million in two months after release and has generated over $200 million in revenue. However, this success story was cut short when NetEase announced layoffs at its US division pointing to a high development cost.
According to Bloomberg's investigation, NetEase CEO William Ding has already begun implementing major changes, including job cuts and studio closures.
The impact of this strategic overhaul can be seen as several studios have faced major changes in recent months. The company suspended operations at Untold Worlds in Canada last November, followed by funding cuts at Seattle-based Jar of Sparks in January. Sweden's Liquid Swords recently announced layoffs, citing "shifting market conditions."
Game File's sources further reveal that NetEase is actively trying to sell most of its non-Chinese studios, potentially affecting more than a dozen development teams worldwide. This includes prominent studios like Quantic Dream, known for games such as Heavy Rain and Detroit: Become Human, and currently working on Star Wars Eclipse. Other affected studios include Grasshopper Manufacture, founded by renowned developer Suda51, and Nagoshi Studios, created by Yakuza series creator Toshihiro Nagoshi.
The situation within NetEase has become increasingly complex under Ding's leadership. Bloomberg's report describes a volatile management style, with frequent changes in direction and decisions. In one notable instance, Ding reportedly considered canceling Marvel Rivals due to concerns about licensing costs for Marvel characters, though the company later denied this account.
The restructuring extends to NetEase's internal operations as well. The company has recently appointed several recent graduates to key leadership positions while longtime executives like Xiaojun Hui, the president of NetEase Games, have stepped back from management roles.
Ding's new approach focused on fewer, more profitable games. Sources familiar with the matter indicate that projects unlikely to generate hundreds of millions of dollars annually are now considered unworthy of pursuit.
For studios like Rebel Wolves, which has a minority investment from NetEase and is working on Blood of the Dawnwalker with Bandai Namco as a publisher, the impact might be less severe. However, for studios wholly dependent on NetEase funding, the future appears uncertain.
Here is a list of more studios under review and potentially at risk (Thanks Grummz):
Fantastic Pixel Castle - (Greg Street's MMO project)
SkyBox Labs - (rumors of issues)
Bad Brain Game Studios
Jackalyptic Games - (Warhammer MMO)
Anchor Point Studios
T-Minus Zero Entertainment
BulletFarm
Spliced
Anchor Point Studios
This restructuring reflects broader challenges in the gaming industry, where post-pandemic changes in player behavior and increasing development costs have led to numerous layoffs and studio closures worldwide. NetEase's decision to withdraw from international markets adds another chapter to this ongoing industry transformation.
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