NetEase closes a fifth Western studio: Just two years after it was founded, Bad Brain Game Studios will shut down for good next week

Just three days after Greg Street confirmed that Fantastic Pixel Castle is closing due to the loss of NetEase funding, yet another NetEase-backed studio says it’s suffered the same fate. Bad Brain Game Studios, founded in 2023 and headed up by former Ubisoft Toronto lead producer Sean Crooks, announced today that it will close its doors on November 17—the same day as Fantastic Pixel Castle—after being unable to find a new source of funding.

“Despite our continuing efforts to seek a new partner for the project, a path forward has yet to materialize,” Crooks wrote in a LinkedIn farewell. “We are deeply grateful to NetEase Games for their support and for giving us runway to explore every possible opportunity. Our team poured everything into this journey—pushing creative and technical boundaries every day with passion, imagination, and craft. What we achieved together stands as lasting proof of this team’s extraordinary talent.

“The enthusiastic response our project has received is a direct reflection of that creativity and dedication. While the outcome may not be what we had hoped for, I’ve seen firsthand that we succeeded in reaching players and peers who believed in what we were building. To those who supported the game, shared encouragement, and championed our vision—thank you.”

Crooks also posted a sizzle reel from Bad Brain’s in-development project, Midnight Riders, and said “game and its underlying IP is still available for acquisition or partnership, and we/NetEase are open to discussions with publishers or studios who see potential in continuing its development.”

Bad Brain is the fifth Western studio to be closed by NetEase over the past year, following Fantastic Pixel Castle, T-Minus Zero (which was recently resurrected by some of its founding members), Jar of Sparks, and Worlds Untold.

Daniel Ahmad, the director of research and insights at analysis firm Niko Partners, said on social media that NetEase’s stunning turnaround reflects “a broader trend across the industry where North America based studios are no longer seen as a safe bet.”

Ahmad dove deeper into the topic earlier this year, following cuts among Marvel Rivals developers at NetEase’s studio in Seattle. While increased “geopolitical risks” are a factor, Ahmad said the massive success of Black Myth: Wukong, one of the biggest games of 2024, was also a “major turning point” in NetEase’s strategy.

“The success of Black Myth: Wukong challenged the industry’s assumption that only Western or Japanese AAA studios could produce globally competitive PC and console titles,” Ahmad wrote in a February 2025 report. “Similarly, Chinese developed live service titles such as Genshin Impact, Naraka Bladepoint, and Wuthering Waves have shown that existing development expertise in the mobile F2P segment can be extended to PC and console platforms successfully.”

That remains the case: Speaking to PC Gamer, Ahmad said NetEase’s change of direction “comes down to cost and risk. Part of this is due to the success of non-US based developed games, the other part is higher risk given how much GaaS or evergreen games dominate the market today. Both NetEase and Tencent are trying to focus on studios with proven success and strong market potential going forward.”

“NetEase is still keeping studios and staff in the US, but more so in a consulting or senior dev capacity, with most work done in China or other countries,” he added. “Ultimately the cost issue comes down to salaries being lower in China, a greater willingness to adopt standardized tools, and even government incentives.”

I’ve reached out to NetEase for comment on the closure of Bad Brain and will update if I receive a reply.