NetEase
Despite the success of Marvel Heroes, NetEase is threatening to withdraw its international investments. Dozens of studios could close
New problems for the video game industry.
Chinese video game publisher NetEase has caused uncertainty with its recent financial moves, suggesting a possible withdrawal of its investments in overseas game studios. The company has denied that it has any plans to reduce its international presence, but industry sources and moves suggest otherwise.
According to multiple sources, NetEase has begun to scale back its overseas studios due to high costs and the maturity of the industry in China. The decision seems to be motivated by the growth of the local industry, as evidenced by the success of ‘Black Myth: Wukong’, developed by Game Science.
One of NetEase’s most recent and successful projects, ‘Marvel Rivals’, made $136 million in its launch month of December. However, the Seattle team that worked on its development has been laid off. Sources say this is just the beginning of a trend that could affect other studios.
David Kaye, founder of the F4 Fund, a private equity fund, said, “China is in retreat: geopolitical tensions, some big bets not paying off and the whims of certain CEOs mean that a massive pullback has begun.”
On the other hand, NetEase has tried to allay these fears. In a statement, the company said, “As far as overseas business efforts are concerned, NetEase has not wavered in its global expansion plans.” However, they also confirmed adjustments to their strategy: “As part of our investment strategy, we started scaling down two of our studios at the end of 2024.”
Despite the good words, there are fears that the company will start selling off international assets, although it may prove difficult to find buyers in the short term. In this case, the hope is for increased investment from Saudi Arabia, which has already made some notorious moves in the video game world. SNK, for example, is owned by an investment fund linked to Prince Mohammed bin Salman, who is an avid gamer and has set goals to make the country a power in the field. Funds linked to the Saudi royal family are also increasing their stakes in major companies such as Nintendo.
NetEase’s moves will be fundamental to the future of studios with great depth and tradition. NetEase currently controls names such as Quantic Dreams (Heavy Rain, Detroit: Become Human), Grasshopper Manufacture (Goichi Suda’s historic studio), or the new studio led by Yakuza creator Toshihiro Nahoshi, among others. In addition, the Chinese giant has stakes of varying sizes in a large number of studios and publishers, which could be seriously harmed without this injection of capital.
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