There have been rumors for some time that Sony is going to buy Kadokawa Corporation, a monolithic Japanese media conglomerate that means nothing to most of you, unless I add the magic words “parent company of the creators of Dark Souls FromSoftware” and perhaps also “parent company Spike Chunsoft.” Sony and Kadokawa were reportedly in talks last month, fueling all sorts of speculation about, say, the PC version of Bloodborne being ritually sacrificed in order to sacrifice Dark Souls 4 as a PS6 exclusive. Now they both came out of the Bargaining Cave and announced… a “strategic capital-business alliance agreement.” What does this mean? Is it sheltered to scream now?
Under the terms of the agreement, Sony will acquire 12,054,100 recent shares of Kadokawa by January 7, 2025 for a total consideration of 50 billion yen. Together with the Kadokawa shares it already holds, it will become Kadokawa’s largest shareholder, owning a total of approximately 10% of Kadokawa shares. So it’s not exactly a takeover. But it gives them a lot to say about Kadokawa’s direction.
Kadokawa and Sony have collaborated on projects in the past. The agreement opens the way to broader cooperation. According to issuing the announcementfuture mergers could include “potential co-investments in content, joint discovery of new creators and joint promotion of further media mixes of both companies’ intellectual properties.” More specifically, they are considering “initiatives to adapt Kadokawa’s intellectual property into live-action films and television series around the world, co-produce anime works, expand the global distribution of Kadokawa’s anime works through the Sony Group, further expand the publishing of Kadokawa’s games, and develop human resources to promote and developing virtual production.”
In brief, they intend to adapt and sell their stuff worldwide, which could include any number of games, but could also include mostly non-gaming works, especially anime. I’m a bit surprised by the phrase “develop human resources to promote and develop virtual production.” I understand that on-set virtual production involves using LED panels as a backdrop while filming a movie or TV show, allowing computer-generated graphics to be displayed in real time. I’m not sure if the press release refers to this though.
Kadokawa CEO Takeshi Natsuno is delighted with the deal. “This alliance is expected to not only further strengthen our IP creation capabilities, but also expand our IP media mixing capabilities with Sony’s support for global expansion, enabling us to deliver our IP to more users around the world,” he remarked with a cheek on his thigh and a twinkle in his eye.
Hiroki Totoki, Sony Group’s chief operating officer and chief financial officer, is similarly tickled. “By combining Kadokawa’s extensive IP and IP creation ecosystem with Sony’s strengths, which promotes the global expansion of a wide range of entertainment, including anime and gaming, we plan to work closely to execute Kadokawa’s ‘Global Media Mix’ strategy aimed at maximizing the value of its intellectual property and Sony’s long-term vision ‘Creative Entertainment Vision’,” he enthused. Is it sheltered to shout now?
I can’t speak to Kadokawa or Sony’s recent approach to such issues as we’ve been more focused on events in North America and Europe, but the lack of a merger is probably good news from a sustainability standpoint in the brief term, as Kadokawa’s absence or Sony’s developers will lose their jobs as a result of post-acquisition due diligence, i.e. cost cutting. Since August, Kadokawa has 26 games in development.
