Yakuza Creator’s New Game in Doubt as NetEase Cuts Funding to Nagoshi Studio

The future of Gang of Dragon, the action game from Yakuza series creator Toshihiro Nagoshi’s newly formed studio, is now deeply uncertain. NetEase, the Chinese gaming giant backing the project, has informed Nagoshi Studio it will halt funding in May, a move triggered by the realization that an additional ¥7 billion (approximately $44.4 million) would be required to complete development. The news, first reported by Bloomberg and corroborated by multiple outlets, casts a significant shadow over Nagoshi’s first venture outside of Sega’s Ryu Ga Gotoku Studio in over a decade.

The abrupt funding cut underscores a broader retrenchment within NetEase’s international game development operations. The company, which had been aggressively investing in studios around the globe, is now scaling back those efforts, leading to closures and layoffs. This isn’t an isolated incident; NetEase recently split with Vancouver-based Worlds Untold, led by Mass Effect writer Mac Walters, and Seattle’s Jar of Sparks, founded by Xbox veteran Jerry Hook, as well as shuttering Ouka Studio, the team behind Square Enix’s Visions of Mana. Video Games Chronicle details the wider pattern of studio closures and funding cuts at NetEase.

A Familiar Formula, A Stalled Debut

Nagoshi Studio was established in November 2021, shortly after Nagoshi’s departure from Ryu Ga Gotoku Studio. Gang of Dragon, revealed at The Game Awards 2025, stars South Korean-American actor Ma Dong-seok (known for roles in Train to Busan and The Outlaws) and, visually, bears a striking resemblance to the Yakuza series Nagoshi helmed for years. The game promised a gritty, action-packed experience, and initially generated considerable excitement among fans eager to see Nagoshi’s grab on a new IP. IGN’s coverage of the game’s reveal highlights the initial enthusiasm surrounding the project.

The parallels to the Yakuza franchise weren’t accidental. In a 2023 interview, Nagoshi explicitly stated his intention to deliver a game that would satisfy his existing fanbase. However, the development process appears to have encountered significant hurdles, necessitating the substantial additional funding that ultimately triggered NetEase’s decision to pull support. The $44.4 million shortfall suggests either unforeseen technical challenges or a scope creep that dramatically increased the project’s cost.

What’s Confirmed, What’s Speculation

As of March 8, 2026, the following is confirmed: NetEase will cease funding for Gang of Dragon in May. Nagoshi Studio employees were informed of this decision on March 6. The project requires an additional ¥7 billion ($44.4 million) to reach completion. Nagoshi is actively seeking alternative investors. NetEase has reportedly offered Nagoshi Studio the opportunity to become independent, but only if they can finance the acquisition of the game’s assets and brand.

What remains unclear is whether Nagoshi will succeed in securing new funding. Reports indicate he’s had no success thus far, but the situation is fluid. The fate of the existing game assets is similarly uncertain. Even as NetEase has offered the studio the chance to purchase them, the financial feasibility of doing so is questionable given the current circumstances. There’s also no definitive word on whether development has been completely halted, or if a scaled-down version of the game might still be possible.

The Stakes for Nagoshi and NetEase

For Toshihiro Nagoshi, the potential failure of Gang of Dragon represents a significant setback. After decades of success with the Yakuza series, this was his opportunity to establish himself as a creative force independent of Sega. The game’s cancellation could damage his reputation and make it more tricky to attract funding for future projects. The pressure to deliver a successful debut was immense, and the current situation underscores the risks inherent in venturing into new territory.

NetEase’s decision, while seemingly harsh, reflects a broader strategic shift. The company is reassessing its international expansion plans and prioritizing profitability over ambitious, long-term investments. This retrenchment is likely a response to challenging market conditions and increased competition within the global gaming industry. Bloomberg’s reporting frames the funding cut as part of a larger trend within NetEase.

A Ripple Effect in the Industry

The situation at Nagoshi Studio is symptomatic of a wider trend of consolidation and caution within the gaming industry. After a period of rapid growth and investment, many companies are now focusing on streamlining operations and reducing risk. This has led to a wave of layoffs and studio closures, impacting developers and publishers alike. The closure of studios like Ouka Studio and the scaling back of NetEase’s international operations demonstrate the fragility of even well-funded projects in the current economic climate.

The potential loss of Gang of Dragon is also a disappointment for fans of the action-adventure genre. The game’s premise and the involvement of Ma Dong-seok generated considerable excitement, and its cancellation leaves a void in the upcoming release schedule. The game’s reliance on a familiar formula – the open-world action and dramatic storytelling reminiscent of Yakuza – may have contributed to the financial concerns, as the market is already saturated with similar titles.

What comes next for Nagoshi Studio remains to be seen. The studio is currently in discussions with NetEase regarding the handling of existing game materials. Whether Nagoshi can secure alternative funding and salvage the project, or whether he’ll be forced to start anew with a different concept, is uncertain. The coming weeks will be critical in determining the fate of Gang of Dragon and the future of Nagoshi’s independent studio.