Founded by Toshihiro Nagoshi, the father of the Yakuza series"Nagotsu Studio" (Nagoshi Studio), their highly anticipated debut workGang of DragonThe game is currently shrouded in the shadow of potential development termination. According to a recent Bloomberg report, Chinese gaming giant NetEase is expected to completely cease funding to Meigoshi Studio starting in May of this year. This sudden decision not only puts the action-adventure blockbuster, which just made its debut at The Game Awards 2025, at risk of running out of funding, but may also directly jeopardize the survival of the entire studio.
A $44.4 million money pit? NetEase to stop investment starting in May.
Meigoshi Studio was founded in 2021, a time when Chinese game giants were aggressively recruiting star producers and establishing first-party studios overseas (especially in Japan). However, the honeymoon period has clearly ended.
According to Bloomberg News, confirmations from Meigoshi Studio employees and a NetEase spokesperson indicate that NetEase's decision to "cut its losses" stemmed from the recent discovery that Meigoshi Studio required a massive $44.4 million (approximately NT$14 billion) to successfully complete the "Dragon Gang" project. Faced with such exorbitant development costs, NetEase ultimately chose to cut its losses and is expected to officially cease financial support in May of this year.
The heavy price of independent development: You have to buy back your intellectual property before you can keep it.
Having lost the protection of its biggest financial backer, Mingyue Studio is actively seeking new sponsors and distribution partners, but reports indicate that no concrete progress has been made so far.
While Meigoshi Studios could technically choose to separate from NetEase and continue the project independently, this path is fraught with difficulties. If they want to retain the "Dragon Gang" brand and related game assets, they would have to personally recoup all the costs NetEase had previously invested. For a startup studio that has yet to release any tangible products and is facing a funding gap, this is undoubtedly an almost impossible task.
Star-studded lineups overshadowed Chinese investment strategies for overseas expansion.
Dragon Gang, an action-adventure game set in Tokyo, originally carried extremely high market expectations. It amazed players worldwide with its trailer at The Game Awards 2025 last year, and also made a big announcement that it had invited Ma Dong-Seok, a well-known South Korean tough guy actor who starred in Train to Busan and Marvel's Eternals, to play the lead role.
Now, this production with its star-studded cast is very likely to follow in the footsteps of NetEase's other overseas investment deals.
In fact, NetEase's patience with its overseas studios has been dwindling significantly in recent years. For example, in 2024, it decisively closed Ouka Studio, a Tokyo-based studio focused on home console game development. Nagoshi Studio is currently on the high-risk side of being included in this wave of "strategic layoffs."
Analysis of viewpoints
NetEase's withdrawal of investment from Meigoku Studio accurately reflects the end of the "era of massive investment" in the global game industry.
In recent years, Chinese giants such as Tencent and NetEase have spent huge sums of money "shopping spree" in Japan to expand their overseas console and PC markets, recruiting a number of top producers such as Toshihiro Nagoshi. However, as these AAA titles, which often take 4 to 5 years to develop, enter the deep waters of development, the astonishing rate of money burning (such as the $44.4 million final payment required by Nagoshi) has clearly exceeded NetEase's patience and bottom line for stopping losses.
For NetEase, it's better to redirect resources back to service-based games or mobile games, where returns are uncertain, rather than investing in a traditional single-player action game. For veteran producers like Toshihiro Nagoshi, who are used to the massive resources supported by SEGA, this incident is also a harsh lesson in the market: in the modern game industry, the halo of being a "star producer" is no longer enough to guarantee an unlimited stream of blank checks from investors.
