NetEase To Halt Nagoshi Studio Funding, Impacting Gang of Dragon

It has been stated in a recent report that NetEase, the Chinese gaming corporation, will cease funding for Nagoshi Studio from May 2026. This is reportedly in response to rising development costs and a high overhead required to complete the game, Gang of Dragon, the studio’s inaugural title.

Gang of Dragon was revealed at The Game Awards in December 2025, emerging as the first game from Toshihiro Nagoshi’s studio, founded after he left Sega in 2021.

Gang of Dragon at Risk of Cancellation

In a report from Bloomberg’s Takashi Mochizuki and Zheping Huang, it was explained that NetEase will ‘cut off funding’ to Nagoshi Studio in May. The studio, founded by Toshihiro Nagoshi, the creator of the Yakuza franchise, hasn’t shipped a game and is only three months gone from revealing Gang of Dragon.

Per the details in the report, NetEase discovered that the game would need an extra $44.4 million to be completed, which was enough to make the firm balk and decide to cut ties.

Those familiar with the situation have said that Nagoshi Studio intends to push on and seek funding elsewhere. NetEase has reportedly ‘allowed’ the studio to continue developing the game, but it’s now up to the studio to fund it. NetEase will negotiate cutting the license out, but only if the studio can ‘pay its way out.’

In November, NetEase shut down Fantastic Pixel Castle just two years after the studio opened. In the same month, Bad Brain Games, a studio that never managed to finish a game, was also shuttered by the Chinese firm.

This year, NetEase found itself in hot water after openly praising AI integration across the full game development ecosystem in a financial report.

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For more Insider Gaming coverage, check out the news that Valve has hinted at further Steam Machine delays

Grant’s adoration for gaming started on the Amstrad CPC in 1996. Now, he’s a multi-platform expert gamer with a deep love for the industry, a passion for esports, and more…

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