Chinese tech giant NetEase is reportedly reevaluating its international gaming ventures, as recent reports indicate a strategic pullback on its foreign studios. According to Game File, the company is exploring the sale of several developers it has established outside of China. This shift follows a series of recent decisions, including the withdrawal of support for projects such as Jar of Sparks and Worlds Untold, alongside layoffs at the NetEase-backed Swedish studio, Liquid Swords.
Strategic Realignment and Financial Pressures
Insiders suggest that NetEase is contemplating divesting from the “majority” of its overseas studios, potentially impacting more than a dozen foreign developers. This decision appears to be driven by a combination of factors, notably a 3.3 percent decline in gross profits year-on-year. With the escalating budgets associated with blockbuster titles, the company is reassessing its willingness to finance projects that do not guarantee substantial returns.
Reports indicate that studios located in Europe, America, and Japan are being afforded a window to secure new investors. A representative from NetEase emphasized the company’s commitment to a more cautious approach in its future strategy, stating, “The company continues to invest in our global business and actively recruits and nurtures talent. At the same time, organizational structure changes aimed at improving performance are a necessary part of our ongoing growth.”
NetEase has a rich history in the gaming industry, having developed and operated online service games for over two decades since the launch of Westward Journey Online in 2001. The recent success of Marvel Rivals underscores the value of this extensive experience. However, the firm acknowledges that it is still in the nascent stages of exploring single-player game development and operations, which necessitates a more cautious evaluation of associated risks and opportunities in today’s dynamic and competitive landscape.
During a recent earnings call, Mr. Ding reiterated NetEase’s dedication to supporting high-quality studios and master creators as part of its overarching strategy. He noted, “For any studio globally, it behooves us as a responsible commercial business to frequently evaluate the progress, viability, and potential for success of our products and teams.” This commitment to strategic evaluation reflects NetEase’s ongoing efforts to align its operations with market realities while nurturing its core strengths in the gaming industry.
