NetEase Abruptly Halts Funding for Nagoshi Studio Following Escalating Development Costs for Debut Title Gang of Dragon

NetEase to exit Nagoshi Studio by May 2026 as Gang of Dragon costs soar. Learn how this decision impacts Toshihiro Nagoshi and the global gaming market.

By: AXL Media

Published: Mar 9, 2026, 10:19 AM EDT

Source: The information in this article was sourced from GamesIndustry.biz

Financial Withdrawal Signals Uncertain Future for Toshihiro Nagoshi

The strategic partnership between NetEase and Nagoshi Studio is set to conclude this spring, following a decision by the parent company to terminate funding in May 2026. Employees were reportedly informed of this shift last Friday, marking a sharp reversal for a studio that was established with high expectations in 2021. While a spokesperson for NetEase confirmed the cessation of support, the company has declined to provide a formal public explanation regarding the specific exit terms or the immediate fate of the studio's staff.

Soaring Production Costs Trigger Strategic Reevaluation

Internal sources suggest that the primary catalyst for the funding cut was a recent financial assessment of the studio’s debut project, Gang of Dragon. Analysts at NetEase reportedly determined that at least ₦7 billion yen, approximately $44.4 million, in additional capital would be required to bring the title to completion. This projected budget overrun appears to have exceeded NetEase's risk tolerance for the project, despite the game recently making a high profile debut with a teaser trailer at The Game Awards last December.

Strategic Restructuring Impacts NetEase Global Subsidiary Network

Nagoshi Studio represents the latest in a series of global subsidiaries to face restructuring or closure under NetEase’s tightening fiscal policy. The company has recently shuttered Bad Brain Game Studios and divested from Fantastic Pixel Castle, both of which struggled to find alternative funding models. While Anchor Point Studios was successfully spun out as an independent entity last month, the pattern suggests a broader move by NetEase to consolidate its international investments and prioritize projects with more immediate paths to profitability.