NetEase Cuts Funding for Yakuza Creator's Gang of Dragon, Studio Faces Closure

The future of Gang of Dragon, the spiritual successor to the beloved Yakuza franchise, has been thrown into serious doubt after publisher NetEase announced it will cease funding for developer Nagoshi Studio effective May 2026.

On March 6, NetEase notified staff at Nagoshi Studio of its decision to pull financial support for the project, marking a potentially devastating blow to the studio founded by industry veteran Toshihiro Nagoshi, the creative mind behind Sega's acclaimed Yakuza series. NetEase confirmed the funding cuts in a statement, citing the studio's request for a budget expansion of $44.4 million to complete development.

Gang of Dragon was unveiled to considerable fanfare at The Game Awards 2025 ceremony, showcasing flashy cinematics and intense action gameplay featuring Korean actor Don Lee. The game was positioned as a spiritual successor to the Yakuza franchise, promising the same gritty crime drama and hard-hitting combat that made Nagoshi's previous work so popular.

According to reports, Nagoshi has been actively seeking alternative funding sources to continue development, but has so far been unsuccessful in securing new backing. The situation is further complicated by NetEase's terms for studio independence: Nagoshi Studio would need to "pay its way out" by purchasing the intellectual property rights and all assets developed to date before it could continue as an independent entity.

If no alternative funding materializes, Nagoshi Studio faces impending closure, and Gang of Dragon will likely never see release. While NetEase could theoretically complete and publish the game independently if secondary deals fall through, this scenario appears increasingly unlikely given the company's current strategic direction.

The cuts at Nagoshi Studio are part of a broader restructuring effort at NetEase, which has been closing studios and reducing investments across its gaming portfolio. In December 2024, the company shuttered Ouka Studio, the Japanese developer behind Visions of Mana. The following February, NetEase fired Marvel Rivals game director Thaddeus Sasser along with his entire US-based team.

These closures and layoffs have occurred alongside downsizing efforts at studios owned and operated directly by NetEase, as the company pursues improved profit margins under chief executive William Ding. The additional $44.4 million required for Gang of Dragon evidently did not align with these financial objectives.

The potential cancellation of Gang of Dragon represents another casualty in what has become a prolonged crisis for the gaming industry. Since early 2024, tens of thousands of jobs have been lost across the sector, primarily affecting large, triple-A studios that traditionally command substantial budgets running into the billions of dollars.

The industry turmoil has created a stark contrast with the success of smaller independent developers. Recent breakout hits from small teams have demonstrated that passion-driven projects can achieve remarkable success, with some indie titles attracting hundreds of thousands of concurrent players despite being developed by minimal staff with limited resources.

For Nagoshi, who departed Sega to form his own studio backed by NetEase investment, the funding cuts represent a significant setback to his post-Sega ambitions. The veteran developer's reputation and track record made Gang of Dragon one of the most anticipated new intellectual properties in development, and its potential cancellation would deny fans the chance to experience his next crime epic.

As of now, the clock is ticking toward May, when NetEase's funding officially ends. Without a financial miracle or successful buyout, one of gaming's most promising upcoming titles may join the growing list of high-profile cancellations that have marked this turbulent period for the industry.