NetEase is in the late stages of talks to poach Toshihiro Nagoshi from Sega. Nagoshi is best known as the creator of the Yakuza series, and if he does join NetEase, it would strengthen China’s giant in Japan.

Toshihiro Nagoshi / Photographer: Gene Wang

At NetEase, Nagoshi is expected to set up his own game development team. The developer, however, is yet to sign a final contract, with the scope of his duties still being discussed. This is according to sources familiar with the situation who spoke with Bloomberg.

Both NetEase and its rival Tencent view Japan, where Sega is based, as a critical market as the regulatory pressure on the tech giants increases in China. Securing the local talent of Nagoshi’s caliber might just give NetEase the edge in its competition against Tencent. And not just in Japan since Nagoshi is capable of creating franchises that can be successful outside Asia.

“Tencent and NetEase have been speaking to just about all publicly traded studios here and are actively courting some privately held developers, too,” said industry analyst Serkan Toto. “They both feel pressure to make headway in Japan, especially since game regulations in their home market are becoming increasingly restrictive.”

Japan is, too, more welcoming of the external investment now that Sony has apparently deemphasized the role of the local studios.

Collectively, NetEase and Tencent hav signed over 20 deals in Japan, investing in smaller teams and devs. Lately, Tencent has invested in Platinum Games and Bokeh Game Studio, the latter staffed with former PlayStation devs.

Nagoshi has been with Sega since 1989. From 2012, he was the chief creative officer for Sega until being appointed creative director this year.