NetEase has withdrawn essential funding from Nagoshi Studio, and the developer now faces closure, according to a report by ScreenHub.

The studio, founded by Toshihiro Nagoshi — the creator of the Yakuza franchise — has not commented publicly on its status. The report does not specify when the funding withdrawal took effect, how many employees are affected, or whether any formal dissolution process has begun.

Nagoshi Studio was established in 2022 after Nagoshi departed Sega, where he had spent over three decades and served as chief creative officer. NetEase backed the venture as part of a broader wave of Chinese publishers investing in Japanese development talent. The studio was reportedly working on an unannounced project, and no release has been disclosed to date.

The reported funding withdrawal fits a wider pattern of retrenchment among Chinese publishers that had expanded aggressively into overseas development during the 2021–2022 period. NetEase in particular has scaled back several international investments, and studios backed during that expansion window have faced mounting uncertainty as publishers re-evaluate returns on overseas output.

For the teams involved, the immediate question is headcount: whether staff will be redeployed within NetEase's broader development portfolio or cut loose entirely. For the industry at large, the case adds another data point to the ongoing correction in publisher-funded independent studios, particularly those founded by high-profile Japanese creators under Chinese corporate backing.

No official statement from NetEase or Nagoshi Studio has confirmed or denied the report. If the closure proceeds, it would end one of the most closely watched founder-led ventures of the recent Japanese studio founding wave — watch for confirmation from either party or from affected staff in the coming weeks.