Nagoshi Studio shuts down after NetEase pulls funding for Gang of Dragon

Studio closure and financial troubles

Nagoshi Studio was dissolved on October 31, 2026, according to an announcement in Japan’s official gazette, Kanpō. The studio’s closure follows the withdrawal of funding by NetEase, one of its primary backers, for its debut game, Gang of Dragon. The project was announced less than a year before the studio’s dissolution, with its first trailer released in December 2025.

The game, set in Tokyo’s Kabukicho district, reportedly required over $44 million to complete development. With NetEase’s exit, Nagoshi Studio sought alternative financial support but was unable to secure the necessary funding. The studio is now beginning the process of liquidating assets and addressing liabilities.

Uncertain future for Gang of Dragon

Gang of Dragon’s Steam store page remains live, though the game’s development is unlikely to continue in its current form. The title was set to feature a new protagonist, Shin Ji-Seong, and was positioned as a spiritual successor to the Yakuza series, which Nagoshi previously led at Sega.

The closure of Nagoshi Studio raises questions about the fate of the game’s intellectual property and whether any other studio or publisher might acquire or revive the project.

What this means

Lazyfounder analysis — our interpretation, not reported fact.

The shutdown of Nagoshi Studio is a stark reminder of the fragility of game development, even for teams with established pedigrees. Toshihiro Nagoshi’s reputation and the Yakuza series’ success were not enough to insulate the studio from the risks of relying on external funding. For founders and operators, this case underscores the importance of diversifying funding sources—or ensuring sufficient runway—before committing to ambitious projects.

NetEase’s withdrawal also highlights the unpredictable nature of publisher-studio relationships. Even high-profile projects can be canceled abruptly, leaving studios scrambling for alternatives. The situation may prompt others in the industry to negotiate more flexible terms or seek more stable partnerships, particularly in an environment where budgets are ballooning and financial risks are escalating.

Key takeaways

• The closure of Nagoshi Studio highlights the financial risks of game development, particularly for studios reliant on external funding. Founders and operators in the sector may need to reassess funding stability and contingency plans.
• The withdrawal of NetEase as a backer underscores the volatility of publisher-studio relationships, even for projects led by industry veterans like Toshihiro Nagoshi.
• The fate of Gang of Dragon serves as a cautionary example for studios seeking alternative funding sources mid-development, especially for high-budget titles.

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