In an industry earthquake, NetEase plans to cut more all-star game studios

More than a dozen teams around the world could be impacted, a source tells Game File.

A few years after announcing the creation or acquisition of nearly 20 western and Japanese game studios geared toward make new big-budget video games, Chinese giant NetEase is pulling back, big-time.

Signs of that shift began appearing last November with the suspension of operations and job cuts at Canadian developer Worlds Untold, a studio NetEase had unveiled just a year earlier.

January saw a similar combo of production freeze, spending cuts and the need for new funding at Seattle-based Jar of Sparks, a studio NetEase had been “proud to announce” in July 2022.

A third studio, Sweden-based Liquid Swords, announced on Monday that it was laying off workers due to “shifting market conditions.” NetEase had invested in the studio in 2022.

But the cuts are not ending there, Game File has learned.

NetEase is actively shopping around more of its non-Chinese studios—many of the very same ones it announced over the last three years—two people familiar with the company’s efforts tell Game File. Neither individual was authorized to speak about NetEase’s plans publicly.

One of Game File’s sources says NetEase plans to divest itself of the majority of its overseas teams, leading to the potential closure of more than a dozen game studios, if they can’t secure new post-NetEase funding.

A NetEase rep declined to comment to Game File on these cuts, let alone the scale of more than a dozen that I’ve heard about. But they did say that “all studios and projects are in constant review and evaluation, and NetEase will determine changes needed to be made throughout that process.”

In a season of hurt for much of the game industry, a further NetEase pullback is likely to deliver pain around the globe.