NetEase Cuts Jobs in Montreal Gaming Division - Chinese Tech Giant Restructures Operations

Chinese gaming giant NetEase announced workforce reductions at its Montreal studio on January 28, 2026, marking another significant restructuring move in the global gaming industry. The company has not disclosed exact numbers of affected employees, but sources indicate the layoffs target multiple departments within the Canadian operation.

The Montreal-based NetEase Games studio, which has been instrumental in developing Western-focused gaming content, faces elimination of positions across development, publishing, and support functions. This workforce reduction reflects broader strategic shifts as NetEase adapts to changing market conditions and refocuses resources on core profitable ventures.

Context of the Decision

NetEase's decision to reduce its Montreal workforce stems from multiple industry pressures converging in early 2026. The gaming sector continues experiencing a post-pandemic correction after years of explosive growth during COVID-19 lockdowns. Consumer spending on games has normalized, forcing companies to optimize operations and eliminate redundancies.

The Montreal studio restructuring aligns with NetEase's broader strategy to consolidate international operations while strengthening its position in the Chinese domestic market. Rising development costs, increased competition from mobile gaming platforms, and shifting consumer preferences toward live-service games have pressured traditional development models.

Additionally, the gaming industry faces ongoing challenges from regulatory changes in key markets, including China's continued oversight of gaming content and monetization practices. These factors have prompted NetEase to streamline operations and focus resources on proven revenue generators rather than experimental Western market expansions.

Impact on Operations

The layoffs primarily affect NetEase's Montreal development team, which has worked on Western-targeted gaming projects since the studio's establishment. Game development roles, including programmers, designers, and artists, represent the majority of eliminated positions. Support functions in marketing, community management, and localization also face reductions.

The Montreal studio served as NetEase's primary North American development hub, focusing on creating content tailored for Western audiences. Projects in development may face delays or cancellation as the company reassigns remaining resources to higher-priority initiatives managed from its Chinese headquarters.

Quality assurance, user acquisition, and publishing support roles have also been impacted, suggesting NetEase plans to centralize these functions rather than maintain distributed operations across multiple continents. The restructuring indicates a shift toward a more focused operational model concentrated in key Asian markets.

Company Financial Background

NetEase reported mixed financial performance throughout 2025, with mobile gaming revenue remaining strong in China while international expansion efforts yielded disappointing returns. The company's stock price fluctuated significantly as investors questioned the effectiveness of overseas investments, particularly in competitive Western markets.

The gaming division, while still profitable, faced margin pressure from increased user acquisition costs and intensified competition from both established players and emerging mobile-first developers. NetEase's traditional strength in massively multiplayer online games faced challenges from the rapid growth of battle royale and casual mobile gaming segments.

Recent quarterly reports indicated declining revenue per user in international markets, prompting management to reassess the cost-effectiveness of maintaining expensive Western development operations. The Montreal studio's projects had not achieved the commercial success necessary to justify continued investment at current staffing levels.

Industry Outlook

NetEase's workforce reduction reflects broader trends affecting the global gaming industry in 2026. Major publishers including Electronic Arts, Activision Blizzard, and Ubisoft have implemented similar cost-cutting measures as the sector adjusts to post-pandemic market realities.

The gaming industry increasingly favors live-service models and mobile platforms over traditional premium game development, creating structural challenges for studios focused on conventional game production. Companies are consolidating resources around proven franchises while reducing investment in experimental or niche projects.

Chinese gaming companies particularly face pressure to demonstrate profitability in international markets after years of aggressive expansion. The regulatory environment in China continues emphasizing domestic content development, encouraging companies like NetEase to prioritize home market opportunities.

Conclusion

NetEase's Montreal layoffs signal a strategic pivot toward operational efficiency and market focus rather than geographic expansion. The company appears committed to strengthening its position in core markets while reducing exposure to challenging international segments. This restructuring positions NetEase to weather ongoing industry turbulence while maintaining competitiveness in the evolving gaming landscape.