NetEase's Marvel Rivals, a resounding success with ten million players in its first three days and millions in revenue for NetEase, nearly faced cancellation. Bloomberg reports that NetEase CEO William Ding initially resisted using licensed Marvel IP, pushing for original character designs instead. This near-cancellation reportedly cost NetEase significant funds, yet the game launched to great acclaim.

This incident highlights a broader shift at NetEase. Ding is streamlining operations, reducing staff, closing studios, and scaling back overseas investments. The aim is to focus on a smaller, more profitable portfolio to counter recent growth stagnation and compete effectively against Tencent and MiHoYo.

The downsizing has already impacted Marvel Rivals, with layoffs at its Seattle studio cited as an "organizational restructuring." NetEase's overseas investment has also ceased, ending involvement with studios like Bungie, Devolver Digital, and Blizzard Entertainment. While NetEase denies setting arbitrary revenue targets for new games, the report suggests that Ding prioritizes projects with the potential for hundreds of millions in annual revenue.

Internal challenges are also evident, with Bloomberg citing concerns about Ding's leadership style. Sources describe him as volatile, prone to rapid decision-making and frequent changes of heart, and known for pressuring employees to work excessive hours. Recent appointments of recent graduates to senior leadership roles further contribute to internal uncertainty. The situation is so severe that NetEase may not release any new games in China next year.

NetEase's retreat from game investments coincides with a period of instability in the global games industry, particularly in Western markets. Recent years have witnessed widespread layoffs, cancellations, and studio closures, alongside numerous high-profile game failures despite significant investment.