NetEase to Cut Funding to Nagoshi Studio
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 08 2026
0mins
Should l Buy NTES?
NetEase plans to cut off funding to its Nagoshi Studio led by Toshihiro Nagoshi, the creator of the Yakuza franchise, Takashi Mochizuki and Zheping Huang of Bloomberg reports, citing people familiar with the matter. Employees were told of the decision on Friday and NetEase will stop funding the studio from May, the sources added.
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Analyst Views on NTES
Wall Street analysts forecast NTES stock price to rise
6 Analyst Rating
5 Buy
1 Hold
0 Sell
Strong Buy
Current: 112.140
Low
135.00
Averages
157.33
High
166.00
Current: 112.140
Low
135.00
Averages
157.33
High
166.00
About NTES
NetEase Inc is a company principally engaged in the gaming business. The Company operates through four segments. Games and Related Value-Added Services segment is engaged in the development and sale of mobile games, game operations, and other value-added services, including in-game virtual items and prepaid credits. Youdao segment provides learning services, smart devices, and online marketing services. The segment's products and services include online courses and digital content services. NetEase Cloud Music segment provides online music services, social entertainment services, and other services through the sale of membership subscriptions for various content and service packages, primarily through the sale of virtual items. Innovative Businesses and Others segment provides rigorous selection, advertising services, email, and other value-added services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Small Developer Incentives: The commission for certain eligible small developers will decrease from 15% to 12%, which is expected to directly enhance earnings for Chinese internet companies, particularly benefiting game developers like Tencent and NetEase.
- Positive Industry Response: Tencent expressed excitement over the adjustment, viewing it as a win-win for the industry, while NetEase stated that the reduction fosters a better relationship between the platform and developers, indicating a favorable market reaction to Apple's policy change.
- Market Impact Assessment: Investment bank Jefferies noted that the adjustment is generally positive for the entertainment sector, including gaming, music, and live streaming, estimating a low-single-digit earnings impact for key players by 2026, reflecting an optimistic outlook for future growth.
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Bottoming Process: Recent price movements indicate that a bottoming process may be underway for Chinese stocks.
Investor Sentiment: The shift in market momentum has led some investors to speculate about a potential turnaround in Chinese equities.
Ongoing Volatility: Despite signs of stabilization, volatility in the market is expected to continue.
See More
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- Strong Financial Performance: NetEase reported total net revenues of RMB 112.6 billion for 2025, a 7% year-over-year increase, with RMB 92.1 billion from games and value-added services, demonstrating the company's solid market leadership with 23 consecutive years of growth in online gaming.
- AI-Driven Transformation: The company has comprehensively integrated AI into its internal workflows, utilizing proprietary tools like CodeMaker and DreamMaker to accelerate development and reduce costs, which enhances product quality and efficiency, indicating a significant shift in future game development.
- Global Product Milestones: The game
See More
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- Gaming Segment Growth: Revenues from games and related value-added services increased by 3.4% to $3.14 billion, with gross margin rising 384 basis points to 70.5%, reflecting the successful launch of self-developed games like Fantasy Westward Journey Online and Where Winds Meet.
- Cloud Music and Innovation Challenges: NetEase Cloud Music's revenue grew by 4.7% to $281.46 million, with gross margin expanding by 273 basis points to 34.7%, while innovative businesses saw a 10.4% decline in revenue to $292.77 million, indicating challenges in the diversification strategy.
- Dividend and Cash Flow: The board approved a dividend of 23.2 cents per share, up from 11.4 cents in Q3, demonstrating robust cash flow with $2.12 billion generated in operating cash flow for the quarter, which enhances shareholder return confidence.
See More
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- User Engagement Increase: The DAU/MAU ratio exceeded 30% in 2025, driven by enhanced user experience and brand awareness, which contributed to steady growth in user engagement and solidified the platform's position among young users.
- Diverse Content Ecosystem: The company expanded its copyrighted music library and actively promoted original music, with over 1 million independent artists contributing 5.6 million tracks, enriching the platform's content and enhancing user stickiness and appeal.
- Innovative Product Features: In 2025, NetEase Cloud Music introduced the AI recommendation model Climber and several innovative features like the
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