Summary
State of Decayco-creator Jeff Strain and his wife have filed a $900 million lawsuit againstNetEase Games. The lawsuit accuses theMarvel Rivalspublisher of defamation and unfair trade practices, and claims that NetEase’s actions severely damaged the Strains' game publishing business, Prytania Media.
The conflict can be traced back to 2024, when Kotaku journalist Ethan Gach reached out to Jeff Strain regarding the closure of Prytania Media subsidiary Crop Circle Games. During their conversation, Gach mentioned non-public details aboutProject Vonnegut, a game indevelopment at Possibility Space, another Prytania subsidiary. Strain later claimed these leaks were the reason behind the drop in investor confidence that prevented Crop Circle Games from securing further funding, leading to its eventual closure.
Filed in January 2025, Jeff and Annie Strain’s lawsuit alleges that NetEase, which was an investor in Crop Circle Games and owned 25 percent of Prytania Media, was responsible for spreading damaging rumors within the games industry and supposedly eroding investor trust in Crop Circle Games. Additionally, the Strains claim that theirrelationship with NetEase became increasingly hostilewhen they requested assurances that theChinese company was in compliance with US foreign investment laws. NetEase resisted cooperation with their request, because doing so would purportedly require revealing ties between the company’s executives and the Chinese Communist Party (CCP).
NetEase Denies Strains' Allegations, Plans to Fight “Vigorously” in Court
The lawsuit even alleges that Activision Blizzard executives “felt threatened” during negotiations over a2023 licensing deal with NetEase. In response, NetEase has strongly denied all allegations, stating in astatement to Polygonthat the claims are “wholly without merit” and that the company will vigorously defend itself. NetEase asserts that its record as a global gaming company speaks for itself and remains confident that the legal process will expose the real reasons behind Prytania Media’s struggles. Meanwhile, the case has been moved to a federal court, where it has now been assigned to a judge.
This legal trouble comes at a time when NetEase has been under public scrutiny for recent business decisions. Just last month,NetEase laid off some crucialMarvel Rivalsdevelopers, including none other than the game’s director, as part of aggressive cost-cutting measures driven by financial underperformance for Q4 FY2025. Since then, other NetEase-owned studios have begun feeling the heat, with some undergoing budget reductions, operation halts, and layoffs, while others stand the risk of closure. NetEase is reportedly in the process of shopping around many of its studios to other publishers in hopes of selling them off and regaining its financial standing, but the Strains' lawsuit may complicate matters greatly.
