08:45 AM EDT, 08/30/2024 (MT Newswires) -- NetEase ( NTES ) and Tencent Holdings are reassessing their investments in Japanese game studios after limited success and a resurgence in the Chinese market, Bloomberg News reported Friday, citing sources with knowledge of the details.

NetEase ( NTES ) has significantly reduced staff at its Tokyo-based Ouka studio, established in 2020, and plans to close the operation after rolling out its final games, the sources reportedly said.

Tencent is also scaling back its investments, stepping away from several planned funding commitments for new games in Japan, Bloomberg quoted the sources as saying.

Tencent faced challenges working with Japanese developers, the sources reportedly told Bloomberg.

While Japanese studios typically focus on smaller, lower-risk projects, Tencent sought large-scale franchises that it could scale globally, one of the sources reportedly said.

The sources said that Tencent has been raising its expectations and setting higher goals when investing in game studios since late last year, according to Bloomberg.

"In supporting studios outside China, we craft our strategy based on our goal of providing better gaming experiences to local and global players," Bloomberg reported, citing a NetEase ( NTES ) representative.

Tencent remains committed to the development of its Japan business and to its partner studios, Bloomberg quoted the company as saying in an emailed response.

NetEase ( NTES ) and Tencent did not immediately respond to requests for comment from MT Newswires.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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