23 Daily — According to gamedeveloper.com, Nagoshi Studio has reportedly closed after five years of operation. Founded in 2021 by former Sega chief creative officer Toshihiro Nagoshi, the studio announced its game funded by NetEase, 'Gang of Dragon,' at The Game Awards in Los Angeles in December 2025. However, following a reduction of funding support from NetEase this year, the studio was officially dissolved according to Japan's government gazette.
NetEase Funding Cuts Lead to Nagoshi Studio Closure
The announced title 'Gang of Dragon' is described as a spiritual successor to the 'Like a Dragon' (Yakuza) series, a franchise previously directed by Nagoshi. Though unveiled at the end of 2025, NetEase reportedly scaled back financial support amid strategic adjustments. Bloomberg reported in March 2026 that the studio required an additional ¥7 billion (approximately $44.5 million USD) to complete the game, which led NetEase to reduce investment and refocus its gaming business. This change in funding contributed to financial difficulties, culminating in the studio’s closure.
Background on Nagoshi Studio and Trends in NetEase’s Gaming Investments
Nagoshi founded the studio after leaving Sega in 2021 with backing from NetEase to enter the market anew. Recently, NetEase has been cutting back or shutting down other studios under its umbrella, including Grasshopper Manufacture and Anchor Point Studios. Several other studios have faced layoffs or closure, indicating a broad shift in NetEase’s investment strategy in gaming. While 'Gang of Dragon' has not been officially cancelled, its future remains unclear, and Nagoshi himself has not made public comments since the game's reveal. The studio’s YouTube channel was briefly deleted, then restored with all videos made private, including the game's reveal trailer.
Editor's take: Lessons from Nagoshi Studio’s Closure for Entrepreneurs
The closure of Nagoshi Studio illustrates the risks associated with heavy reliance on single major investors such as NetEase, whose funding strategies can shift significantly. For game startups or studios dependent on a sole large source of capital, stable funding is critical for sustaining development and operations. This event also emphasizes the substantial capital demands and market risks inherent in game development, underscoring the importance of seeking diversified financing sources to mitigate the impact of sudden funding reductions. Entrepreneurs can verify project resilience by assessing the financial health and industry trends of key investors, and by preparing contingency plans to avoid similar outcomes.