NetEase Games is reportedly considering further closures of its overseas studios as part of an extensive cost-cutting initiative. According to recent reports, the gaming giant is actively exploring alternatives, including selling off some of its subsidiaries.
Financial Struggles and Strategic Shift
On February 20, NetEase published its Q4 2024 financial report, revealing a 1.5% year-on-year revenue growth but a 2.6% decline in gross profit. These results failed to meet analyst expectations and prompted speculation about potential downsizing efforts. Bloomberg subsequently reported that NetEase nearly canceled Marvel Rivals and has begun aggressive restructuring, a move reportedly directed by CEO William Ding. The focus appears to be shifting toward a smaller, more manageable portfolio of titles.
Over a Dozen Studios at Risk
Several NetEase-owned studios have already been affected by this downsizing, and more may follow. According to Game File’s Stephen Totilo, the company is “actively shopping around” multiple overseas studios, many of which were only recently established. If no buyers emerge, these subsidiaries could face closure before releasing a single game.
In the past two years, NetEase has made a habit of appointing well-known industry veterans to lead its new studios. This includes Resident Evil producer Hiroyuki Kobayashi at GPTRACK50, Mass Effect writer Mac Walters at Worlds Untold, and Watch Dogs producer Sean Crooks at Bad Brain Game Studios. None of these studios have released a game yet, and their future now hangs in the balance.
List of Affected NetEase Studios
Below is a list of NetEase-owned studios that may be impacted by the ongoing cost-cutting efforts:
Fully Owned Studios
- Anchor Point Studios (Spain)
- Bad Brain Game Studios (Canada)
- BulletFarm (California, U.S.)
- Fantastic Pixel Castle (U.S.)
- GPTRACK50 Studios (Japan)
- Grasshopper Manufacture (Japan)
- Jackalyptic (Texas, U.S.)
- Jar of Sparks (Washington, U.S.) – Paused operations in January 2025
- Liquid Swords (Sweden) – Partially owned by NetEase; underwent layoffs in February 2025
- Nagoshi Studio (Japan) – Reportedly lost its marketing budget recently
- NetEase Games Montreal (Canada)
- NetEase Games North America (California, U.S.)
- NetEase Games Korea (South Korea)
- NetEase Games Tokyo (Japan)
- PinCool (Japan)
- Quantic Dream (France)
- Skybox Labs (Canada)
- Spliced (UK)
- Studio Flare (Japan)
- T-Minus Zero Entertainment (Texas, U.S.)
- Worlds Untold (Canada) – Paused operations in November 2024
Partially Owned Studios
- Rebel Wolves (Poland) – No indication of impact yet
NetEase has also made minority investments in various other developers, including Rebel Wolves, but there is no confirmation that these ventures will be affected.
Future Uncertainty
As of now, NetEase has already halted operations at Worlds Untold and Jar of Sparks. However, it remains unclear how long the company will continue attempting to sell off its studios before resorting to additional closures. The gaming industry will be closely watching NetEase’s next moves, especially given its history of rapid expansion followed by sudden pullbacks.
With multiple studios in limbo, the fate of many NetEase-backed projects is now uncertain. Developers and fans alike are left wondering whether some of these ambitious studios will ever have the chance to bring their visions to life.
