NetEase Founder Nearly Cancels Marvel Rivals Over IP Concerns

NetEase's Marvel Rivals has proven to be a smashing success, attracting an impressive ten million players within just three days of its launch and generating substantial revenue for the developer in the subsequent weeks. However, a recent Bloomberg report sheds light on the internal challenges at NetEase, revealing that CEO and founder William Ding nearly canceled the game due to his hesitations about using licensed intellectual property (IP).

According to Bloomberg, Ding is steering NetEase towards a more focused and streamlined portfolio in an effort to counteract a recent decline in growth and to better compete with industry giants like Tencent and MiHoYo. This strategic shift has involved significant layoffs, studio closures, and a complete withdrawal from overseas investments. The report highlights that Ding was initially reluctant to pay for the use of Marvel characters, proposing instead that artists create original designs. This near-cancellation reportedly cost NetEase millions, but ultimately, Marvel Rivals was released and has since enjoyed tremendous success.

Despite the game's triumph, NetEase's restructuring efforts continue. Just this week, the Marvel Rivals team in Seattle was laid off, with the company citing "organizational reasons" for the decision. Over the past year, Ding has also pulled back from investing in international projects, having previously made significant investments in studios such as Bungie, Devolver Digital, and Blizzard Entertainment. The report suggests that Ding now views games that cannot generate hundreds of millions in annual revenue as not worth the company's time, although a NetEase spokesperson clarified to Bloomberg that the company does not set "arbitrary blanket numbers" for determining a new game's viability.

Bloomberg's sources also describe a challenging internal environment at NetEase, attributing much of the turmoil to Ding's leadership style. Employees reportedly experience Ding's rapid decision-making and frequent changes of mind, pressure to work late hours, and the recent appointment of numerous recent graduates to leadership positions. The report also notes that Ding has canceled so many projects that NetEase might not release any new games in China next year.

NetEase's retreat from game investments coincides with a period of uncertainty in the broader gaming industry, particularly in Western markets. The past few years have been marked by widespread layoffs, project cancellations, and studio closures, compounded by the underperformance of several high-budget, high-profile games despite lofty company expectations.