Nagoshi Studio Dissolved, Ending Gang of Dragon Development

Key points

• The Japanese government gazette Kanpo published a notice on October 31, 2026, confirming Nagoshi Studio was officially dissolved by shareholders' resolution.
• NetEase withdrew funding in March 2026, stating that at least 7 billion yen (approximately $44.4 million) was needed to finish Gang of Dragon, a figure the studio could not secure from other sponsors.
• NetEase informed the studio that while it could continue independently, it would have to bear all costs to retain the assets or brand, leading to the closure.
• The studio, founded in 2022 by Toshihiro Nagoshi, had debuted a teaser for Gang of Dragon at The Game Awards in December 2025.
• This closure follows the September 2026 split of Grasshopper Manufacture from NetEase, indicating a broader trend of Japanese developers ending partnerships with the Chinese publisher.

Background

Toshihiro Nagoshi, who joined Sega in 1989 and served as chief creative officer until 2021, founded Nagoshi Studio in 2022. The studio was part of NetEase's investment strategy in Japanese gaming. While the archive notes recent developments in other Japanese studios, such as the release of Stranger Than Heaven by RGG, the current focus is on the financial failures within NetEase's portfolio. The closure of Nagoshi Studio mirrors the earlier restructuring of Xbox's Forza developers, highlighting industry-wide consolidation and funding challenges.

How outlets are covering it

GamesIndustry.biz and Kotaku agree on the core facts: the studio's dissolution on October 31, 2026, and the cancellation of Gang of Dragon due to NetEase's funding withdrawal. GamesIndustry.biz emphasizes the legal dissolution via the government gazette and the specific financial shortfall of 7 billion yen. Kotaku highlights the practical signs of the studio's decline, such as the deletion of its YouTube channel in April 2026 and the departure of key talent, including director Daisuke Sato, who described himself as 'ex-Nagoshi Studio' in June 2026. Both outlets note the broader pattern of Japanese studios leaving NetEase, citing Grasshopper Manufacture's recent independence as a parallel case.

Why it matters

The closure of Nagoshi Studio signals a significant shift in the relationship between Chinese publishers and Japanese developers. It underscores the financial risks associated with high-budget, cinematic action titles and the difficulty of securing alternative funding in a volatile market. For fans of the Yakuza series, the cancellation of Gang of Dragon removes a potential spiritual successor, while the broader trend suggests a re-evaluation of cross-border investment strategies in the gaming industry.

What to watch

With the studio dissolved, Gang of Dragon is unlikely to be released, despite remaining listed on Steam. Industry observers will watch for further exits from NetEase's Japanese portfolio and the potential impact on other high-profile projects. The departure of key talent from Nagoshi Studio may influence the development of other titles in the genre, as experienced developers seek new opportunities.