Chinese gaming giant NetEase Games is reportedly planning to stop funding Nagoshi Studio beginning in May 2026, marking a significant development for the studio founded by veteran game creator Toshihiro Nagoshi. The decision comes as part of a broader effort by NetEase to reduce its investment in game development operations worldwide. According to reports citing sources familiar with the matter, employees at Nagoshi Studio were informed of the funding cut on March 6. The move has raised questions about the future of the studio and its first announced project, GANG OF DRAGON.

A Studio Founded by a Yakuza Series Veteran

Nagoshi Studio was established in November 2021 after Toshihiro Nagoshi left SEGA and the well-known development team Ryu Ga Gotoku Studio, where he played a major role in creating the long-running Yakuza franchise.

Backed by NetEase Games, the studio was created with the goal of developing high-quality action titles led by Nagoshi’s creative direction. The team spent several years building its first major project before officially revealing GANG OF DRAGON during The Game Awards 2025 in December last year.

The reveal generated interest among fans who were eager to see what Nagoshi would create after leaving SEGA, particularly given his reputation for crafting narrative-driven action games.

Rising Development Costs Behind the Decision

Reports suggest that NetEase Games’ decision to halt funding was influenced by the rising development costs associated with finishing GANG OF DRAGON. Internal estimates indicated that at least seven billion yen, or approximately $44.4 million, would be required to complete the project.

This additional funding requirement reportedly prompted NetEase to reconsider its continued investment in the studio. The company is currently undergoing a wider restructuring effort aimed at reducing its global development footprint.

These changes have already led to layoffs and closures across several teams connected to NetEase. One of the most notable examples is Ouka Studios, the developer behind Visions of Mana, which was also affected by the company’s recent downsizing efforts.

Nagoshi Studio Seeking New Investors

However, development costs for GANG OF DRAGON reportedly increased as production continued. Internal estimates suggested the project would require at least seven billion yen, or about $44.4 million, to finish.

Because of that figure, NetEase reconsidered its long-term investment in the project. The company has recently taken steps to reduce its development spending worldwide. Consequently, several studios and teams have already faced layoffs or closures.

For example, Ouka Studios, the developer behind Visions of Mana, also felt the impact of NetEase’s recent restructuring efforts. These moves highlight how rapidly conditions in the global games industry can change.

Uncertain Future for GANG OF DRAGON

With funding set to end in May, the future of GANG OF DRAGON remains uncertain. Discussions are reportedly ongoing between Nagoshi Studio and NetEase regarding how to handle the game’s existing development materials.

The situation highlights the broader volatility currently affecting the global games industry, where rising production costs and shifting investment strategies are forcing companies to reevaluate long-term projects.

For now, the fate of Nagoshi Studio and its debut title will likely depend on whether Toshihiro Nagoshi can secure new financial backing before NetEase officially withdraws support later this year.