Report: NetEase downsizes game studios in wake of China’s latest regulations.

NetEase, which is the second-largest game publisher in China, has reportedly downsized some of its studios and taken dozens of employees off their jobs. It happened in the wake of the country’s latest restrictions on the games industry.

While the company didn’t announce any layoffs, dozens of programmers, creative artists, and designers were told to look for new jobs inside and outside NetEase, according to a South China Morning Post report.

“With the new regulations, and narrower opportunities to earn revenue, companies will be less likely to take risks than before,” China Skinny managing director Mark Tanner stated, also saying that Chinese game developers might become more conservative in running their business.

The list of the latest regulations includes the slowdown of the games approval process and cutting the playtime for minors to only three hours a week. It is not to mention the controversial article from the Chinese newspaper, which called video games “spiritual opium” and led to Tencent and NetEase shares dropping.

Despite all the concerns, another source told South China Morning Post that NetEase’s latest move is just a part of the company’s development cycle and “normal operational changes.”