NetEase's Global Game Strategy Shift

The recent news about NetEase laying off some of its US-based Marvel Rivals developers, including a game director, has raised eyebrows. The game has 40 million players and is doing well in the market. Analysts are now trying to make sense of this surprising move. NetEase's decision to downsize its US operations is not just about politics. It's also about changing its global strategy. The company has been expanding its footprint outside China since 2019. This includes opening and investing in studios in various countries to develop high-end PC and console games. But now, NetEase is rethinking this approach. NetEase has made several significant changes to its global games business. It has closed or scaled down funding for studios in Japan, Canada, and the US. This includes Ouka Studio in Japan, Worlds Untold in Canada, and Jar of Sparks in the US. Even studios like Liquid Swords and SkyBox Labs, which were partly funded by NetEase, have announced cuts. The core development team for Marvel Rivals is based in Guangzhou, China. This includes a second game director, Guangyun Chen, alongside the US-based director, Thaddeus Sasser, who was recently let go. This move suggests that NetEase is consolidating its operations and focusing more on its home base. NetEase and other Chinese giants like Tencent and miHoYo have been investing heavily in overseas games and teams. But a turning point came in 2024 when Black Myth: Wukong, developed by a small Chinese team, became a huge success. This challenged the industry's assumption that only Western or Japanese studios could produce globally competitive titles. So, why did NetEase cut its US-based Marvel Rivals development team? It's likely due to high costs and lower returns in recent years. The pandemic boom is over, and companies are looking to streamline operations to reduce costs and shorten development cycles. NetEase is also mitigating risks from US-China policy changes. It's not just NetEase that's scaling back operations in the US. The US video game industry has seen thousands of layoffs in recent years. This is happening even as some US-based companies, like Electronic Arts, continue to see huge profits. The industry is going through a turbulent time, and companies are adjusting their strategies accordingly. The layoffs at NetEase's US-based Marvel Rivals team are part of a broader trend in the video game industry. Companies are rethinking their global strategies and consolidating their operations. This is a critical time for the industry, and it will be interesting to see how things play out in the coming years.