As Sony’s pursuit of Kadokawa gathers pace, financial experts say it may be tough for the PlayStation maker to buy the entirety of FromSoftware’s parent company.
Japan Toyo Keizai (By Machine) reported that Sony may be deferred with the transaction due to the costs associated with having to acquire all of Kadokawa, rather than the parts in which it is actually interested.
According to reports, Kadokawa is only interested in entering into a deal with Sony if it purchases the entire company. However, Sony is reportedly only interested in “mining” anime and video game assets, which likely includes the creator of Elden Ring.
According to expert estimates, the purchase of all of Kadokawa will cost 640 billion yen (about $4.3 billion). Currently, Sony’s financial resources for buyouts are apparently constrained due to investments made elsewhere. For comparison, in 2022 Sony bought Destiny developer Bungie for $3.7 billion. Since then, the studio has experienced multiple rounds of layoffs and project cancellations.
There is also the distinct prospect of a bidding war that could result in Kadokawa’s selling price exceeding Sony’s limit. The alternative is for Sony to purchase 50% of Kadokawa and turn it into a non-wholly owned subsidiary.
Kadokawa’s business spans areas that fit into Sony’s broader entertainment offering, which includes anime, manga, television and film. Kadokawa is a prolific anime publisher, and Sony already owns anime streamers Crunchyroll and Funimation. In addition to FromSoftware, Kadokawa owns Danganronpa developer Spike Chunsoft, Octopath developer Traveler Acquire, and RPG Maker and Pixel Game Maker developer Gotcha Gotcha Games. Kadokawa is the majority owner of FromSoftware and holds approximately 70% of the company. Sony already owns about 14% of the developer and Tencent about 16%.
Piers Harding-Rolls, director of research at Ampere Analysis, told IGN that news of a potential deal isn’t that surprising. “Sony’s interest in FromSoftware, Kadokawa’s game publisher, became more concrete in 2022 when the company acquired approximately 14% of the company following a multi-year relationship with the company,” Harding-Rolls said.
“At the time, Sony mentioned a broader interest in multi-media development of anime and gaming IP to support other media businesses. So in this sense, any agreement concluded with the parent company Kadokawa, which also operates extensively in the manga and anime industry, is a natural extension of this previous agreement. These other areas align perfectly with Sony’s anime business.
“Market conditions for acquisitions have changed dramatically over the past two years, but Sony will always pursue opportunities that drive its growth and strengthen its intellectual property portfolio, as well as represent value. This move may also have a defensive element. FromSoftware is an vital partner in Sony’s gaming industry and does not want a competitor to take control of Kadokawa and potentially disrupt that relationship. This helps Kadokawa also operate in areas that fit well with Sony’s broader business.
In Sony’s case, the gaming division has already experienced significant layoffs and the closure of multiple studios this year, including Creator of Concord, Firewalk. in February announced a round of layoffs affects 900 employees, or approximately 8% of PlayStation’s global workforce. The layoffs affected multiple PlayStation studios, including Insomniac, Naughty Dog, Guerrilla, and Firesprite, but London-based PlayStation studios were hit hardest by the closure announcement.
Photo: Yui Mok/PA Images via Getty Images.
Wesley is the UK news editor at IGN. Find him on Twitter at @wyp100. Wesley can be reached at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.
