Layoffs at Marvel Rival Contribute to Larger Workforce Reductions at NetEase Games

Earlier this week, NetEase made surprising reductions at its Marvel Rivals development studio in Seattle, leaving many puzzled about the motives behind trimming the team on such a thriving project. Launched in December, Marvel Rivals has impressed with its remarkable success, drawing in over 40 million players and contributing significantly to NetEase’s whopping $2.9 billion in gaming and services revenue for that quarter.

Intriguingly, it’s been rumored that CEO Ding floated the idea of scrapping Marvel Rivals prior to its release, largely due to concerns over the cost of licensing Marvel’s iconic superheroes and villains from Disney. He supposedly even considered substituting these characters with original designs from NetEase’s own artists. However, NetEase has outright denied these claims, according to Bloomberg.

Over the past year, NetEase has been scaling back its investments in various studios outside of China. Notable examples include the Vancouver-based Worlds Untold, led by former BioWare creative Mac Walters; Seattle’s Jar of Sparks, established in 2022 by Xbox veteran Jerry Hook; and Tokyo’s Ouka Studio, renowned for developing Visions of Mana under Square Enix. Even within China, Ding has reportedly downsized domestic studios to an extent that they might not release any major titles by 2026.

Following up on Bloomberg’s report, Game File shared on Friday that NetEase intends to pull back from “the majority of its overseas teams,” a move that could impact more than a dozen studios under its umbrella. This shift might affect recent initiatives by the company, such as T-Minus Zero Entertainment, founded by ex-BioWare Austin VP Rich Vogel, and Fantastic Pixel Castle, which is working on a “modernized fantasy MMORPG” under the guidance of World of Warcraft and League of Legends veteran designer Greg Street. Not to forget, NetEase ventured into acquiring Grasshopper Manufacture and Quantic Dream in 2021 and 2022, respectively.

For fans of the Yakuza/Like A Dragon series who have been eagerly awaiting new projects from its former developers, the recent news appears somewhat grim. NetEase is reportedly scaling back on funding and development time for new projects from Japanese studios, and it seems there are no plans to push them into the spotlight. Still, Ryu Ga Gotoku Studio is keeping aficionados on their toes with promises of fresh titles like a new Virtua Fighter and Project Century.

These layoffs at NetEase’s international studios are indicative of the broader trend of uncertainty rippling through the video game industry, which has witnessed extensive cutbacks in recent years.

Update: New insights from Game File have further highlighted the bleak outlook on NetEase’s strategic retreat from international studios, painting an even graver picture of the unfolding scenario.