Prytania Media Sues NetEase for $900 Million, Citing Efforts to "Skirt Federal Regulations"

Nicole Carpenter at Polygon reports that Annie and Jeff Strain of Prytania Media have filed a lawsuit against developer NetEase. This comes hot off the heels of NetEase's

Announced via a report by Nicole Carpenter at Polygon, Annie and Jeff Strain, founders of Prytania Media, have filed a lawsuit against developer NetEase. This lawsuit comes after a series of events that saw the closure of several studios owned by Prytania, kicking off with the shuttering of Crop Circle Games in March 2024.

Now, the Strains are seeking $900 million in damages from NetEase for allegedly spreading "false and defamatory rumors" about Prytania in an effort to scuttle a $750 million investment from an unnamed firm. The lawsuit, which can be read in full thanks to a Scribd upload by Polygon, claims that NetEase was aiming to bankrupt Prytania in order to take a majority stake in the company.

However, a statement from NetEase to Polygon on the lawsuit affirms that they will be "vigorously defending" themselves against these claims, which they deem "baseless". The statement went on to add that they "look forward to the proceedings, which will shed light on the real reasons behind the demise of the Strains’ studios and the true nature of Prytania’s financial dealings."

This lawsuit follows a turbulent few years for both Jeff Strain and his studios. Having previously worked on titles like StarCraft and Diablo at Blizzard before leaving to form ArenaNet, most famously known for Guild Wars, which was later sold to Korean publisher NCSoft, Strain would later depart the company in 2009 to found Undead Labs. There, he would helm another beloved franchise with the State of Decay series.

Yet, employees of Undead Labs, who in 2018 shipped State of Decay 2, were caught off guard when they learned that Strain had sold the studio to Microsoft. Select members of staff had been informed only a few days before the announcement, and many only learned by listening to Microsoft Gaming CEO Phil Spencer's 2018 E3 speech.

As part of a larger breakdown of sexism and toxicity following the studio's sale to Microsoft, Ethan Gach at Kotaku reported that even longtime employees experienced whiplash at the announcement and many even recalled Strain staunchly championing the developer as remaining independent.

Strain, oddly, chose not to respond to Kotaku's questions directly and instead posted a now-deleted Medium storyrefuting the claims of his former employees. He would then go on to found Possibility Space, and during the upsell of reports on Activision Blizzard's toxic workplace, penned a letter to the industry urging for unionization.

However, Possibility Space would be shut down in Apr. 2024. In a message to employees, Jeff Strain blamed the closure on staff communicating with the aforementioned journalist, Ethan Gach, for an in-progress Kotaku article investigating the previous shuttering of Crop Circle Games, another Prytania Media studio which had closed only a month prior. This was seen as a wild and bizarre move by many in the industry. Strain claimed to be leaving gaming to focus on his family.

Now, a report by IGN on December 10th, brings forth new details regarding the lawsuit. It is alleged that NetEase was aware of Prytania's financial difficulties and actively sought to worsen them. This strategy, according to the lawsuit, was part of a broader scheme by NetEase to gain a majority stake in Prytania without having to pay a premium.

The lawsuit further asserts that NetEase engaged in a campaign of false statements and rumors to discredit Prytania and Strain, ultimately leading to the collapse of a $750 million investment from an unnamed firm. This investment, the lawsuit claims, was on the verge of being finalized before NetEase's actions.

As a result of these alleged actions, which also included efforts to avoid compliance with U.S. law due in part to its connection with the CCP (Chinese Communist Party), the Strains are now suing NetEase for $900 million in damages. This includes $750 million for the failed investment and an additional $150 million for the alleged false rumors and malicious gossip.

In a statement to IGN, a spokesperson for NetEase expressed the company's intent to vigorously defend itself against what they term "baseless claims". They expressed their belief that the pending proceedings will ultimately shed light on the true reasons behind the demise of the Strains' studios and the nature of Prytania's financial dealings.

The lawsuit also names several high-ranking executives at NetEase, including CEO Ding Lei, as defendants. It remains to be seen how this case will unfold and what impact it will have on the gaming industry at large.