Layoffs at Marvel Rivals Reflect Wider Reductions at NetEase Games

This week, NetEase made waves by cutting jobs at its Seattle-based Marvel Rivals development studio. At first glance, it seemed surprising that such a decision would come after the game had captivated over 40 million players since its debut in December. This success contributed significantly to NetEase’s impressive $2.9 billion revenue in gaming and services for the quarter of the launch.

Interestingly, it’s been suggested that Ding Lei, NetEase’s billionaire CEO, considered pulling the plug on Marvel Rivals even before its release. He allegedly hesitated at the thought of paying Disney a hefty licensing fee for using Marvel’s iconic characters and even pondered replacing them with original designs from NetEase artists (though NetEase has refuted this claim, as reported by Bloomberg).

Over the past year, NetEase has been scaling back its investments in several studios outside of China. This includes divesting from projects like Worlds Untold in Vancouver, led by ex-BioWare creative Mac Walters; Jar of Sparks in Seattle, started by Xbox veteran Jerry Hook; and Tokyo’s Ouka Studio, known for working on Visions of Mana for Square Enix. On top of these international cutbacks, there are also reports of significant reductions in operations within China, raising concerns that NetEase’s domestic studios might not deliver any major titles by 2026.

Just as Bloomberg’s story hit the stands, Game File on Friday revealed that NetEase is planning to step back from “most of its overseas teams.” This move threatens the future of over a dozen studios backed by the Chinese giant. Among those potentially affected are newly established entities like T-Minus Zero Entertainment, founded by ex-BioWare Austin VP Rich Vogel, and Fantastic Pixel Castle, working on a “modernized fantasy MMORPG” under the direction of Greg Street, a seasoned designer with experience on World of Warcraft and League of Legends. Additionally, NetEase’s previous acquisitions, such as Grasshopper Manufacture and Quantic Dream in 2021 and 2022, respectively, might also feel the heat.

For fans of Yakuza/Like A Dragon eagerly awaiting new creations from its original creators, the news isn’t great. NetEase is reportedly pulling back on funding and development time for new projects from its Japanese studios, with no plans to market or promote them. On a brighter note, fans can still anticipate fresh content from Ryu Ga Gotoku Studio, including a new Virtua Fighter and Project Century.

NetEase’s layoffs at international studios are just a part of a broader trend of unpredictability within the video game industry, which has faced substantial downsizing in recent years.

Update: We’ve now included fresh insights from Game File, offering an even bleaker forecast of NetEase’s strategy to disengage from its overseas studios.