NetEase Cuts Funding for Yakuza Creator's New Game Amid Scaling Back Game Dev Activities

Toshihiro Nagoshi, the creator of the Yakuza franchise, revealed his latest project at the 2025 Game Awards in December. Now, just three months later, NetEase is pulling the plug and will stop all funding for the game's development team.

According to a Bloomberg report, Nagoshi Studio Inc. is having its funding cut off by NetEase, best known recently as the publisher and developer of Marvel Rivals. A spokesperson for NetEase said that they will "stop financing the studio from May."

It's a disappointing turn of events following Gang of Dragon's exciting reveal. After feeling the highs and lows of Yakuza Kiwami 3, Gang of Dragon had the chance to do something truly special. Featuring Ma Dong-seok as the main protagonist, as well as a Kabukicho district setting, Gang of Dragon delivered "an all-killer, no-filler style" trailer akin to iconic B-grade Hollywood films.

Now, all of those hopes and dreams have been dashed, despite the game being said to be deep into development. Bloomberg explains that Netease made the call after discovering that Gang of Dragon would require an additional ¥7 billion ($44.4 million) to complete the game. For what it's worth, NetEase posted $2.5 billion in profit in the fourth quarter of 2025, an increase of 8.7% year to year.

Despite the decision, Nagoshi is seeking new investors and is currently in discussions with NetEase about the possibility of moving forward with a hypothetical new partner.

NetEase Has Been Scaling Back Game Development Activities for Well Over a Year

This isn't the first time NetEase has pulled funding or scaled back development in the past year-plus.

Following the massive success of Marvel Rivals, NetEase decided to lay off team members based in United States-based studios in early 2025. "This is such a weird industry," said Thaddeus Sasser, a former Game Director at NetEase. "My stellar, talented team just helped deliver an incredibly successful new franchise in Marvel Rivals for NetEase Games...and were just laid off!"

In November of 2025, NetEase also pulled the funding for the upcoming MMORPG project by Fantastic Pixel Castle, comprised of several former World of Warcraft developers, notably Greg 'Ghostcrawler' Street.

Nagoshi's possible closure is also the latest of the seemingly never-ending stories of studios closing down. Earlier this week, Highguard (also revealed at the 2025 Game Awards) developer Wildlight announced it is shutting down, and last year was dominated by the continued string of layoffs, notably the massive cuts by Microsoft affecting the Xbox division.

If the first few months of 2026 are any indication, this trend shows no signs of stopping. NetEase has not publicly commented on the matter at the time of writing.