Sony Becomes Kadokawa's Biggest Shareholder As Companies Form Alliance 1
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Sony, it seems, will not acquire Kadokawa outright. Instead, the giant Japanese organisations have today announced a strategic capital and business alliance, which will see Sony become Kadokawa’s largest shareholder.

The deal, scheduled to go through on 7th January, will see Sony purchase 12,054,100 fresh shares in the company, for a fee of ¥50 billion (~$320 million). It already owned a 2% stake.

A press release reads: “With the acquisition of the new shares, Sony will become Kadokawa’s largest shareholder, holding approximately 10% of its shares, including the shares Sony previously acquired in February 2021.”

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The correspondence continues that the tightened relationship will “maximise both companies’ IP value globally and facilitate wider and deeper collaboration, such as potential joint investments in the content field, joint discovery of new creators, and joint promotion of further media mixes of both companies’ IP”.

It adds: “In the future, the two companies plan to discuss specific initiatives for collaboration, such as initiatives to adapt Kadokawa’s IP into live-action films and TV dramas globally, co-produce anime works, expand global distribution of Kadokawa’s anime works through the Sony Group, further expand publishing of Kadokawa’s games, and develop human resources to promote and expand virtual production.”

To be honest, while we’ll need to wait for more details to emerge, this seems like the best possible outcome for all involved. Kadokawa maintains its ownership and autonomy, but it now enjoys an even stronger relationship with Sony, which should help both companies to achieve their respective aims.

“Through this capital and business alliance, we will become the largest shareholder of Kadokawa, which consistently creates a wide variety of IP, including publications and books, such as light novels and comics, as well as games and anime,” Sony boss Hiroki Totoki said. “By combining Kadokawa’s extensive IP and IP creation ecosystem with the strengths of Sony, which has promoted the global expansion of a wide range of entertainment, including anime and games, we plan to work closely together to realize Kadokawa’s 'Global Media Mix' strategy, aimed at maximizing the value of its IP, and Sony's long-term vision, 'Creative Entertainment Vision’.”

Kadokawa’s head honcho Takeshi Natsuno added: “We are confident that this will greatly contribute to maximizing the value of our IP and increasing our corporate value in the mid- to long-term. We intend to do our utmost to ensure that our collaborative efforts with Sony produce great results in the global market.”

Who Is Kadokawa?

Kadokawa is a Japanese media conglomerate with its finger in a lot of pies. Primarily, it’s a leading business when it comes to comics and light novels, but it also owns the rights to a lot of valuable intellectual property.

Among its subsidiaries are game developers Spike Chunsoft and Acquire, although the piece de resistance of its gaming division is FromSoftware, the creator of Elden Ring.

Why Does Sony Want to Strengthen Its Relationship with Kadokawa?

Sony, historically, has always been best known for its electronics. But in recent years it’s slowly transitioned into an entertainment company, with Sony Pictures Entertainment, Sony Music Entertainment, and Sony Interactive Entertainment among its flagship divisions.

The company has specifically bet big on the ever-spiralling popularity of anime, buying up streaming services like Crunchyroll and Funimation. But it’s complained recently it doesn’t have enough IP, so this relationship with Kadokawa will give it access to a wealth of content.

Will FromSoftware Start Making Exclusives for PS5?

It’s really important to remember that FromSoftware has always had a long and strong relationship with PlayStation, and Sony has published many of the developer’s seminal games, including Demon’s Souls and Bloodborne.

However, we can’t imagine much will change moving forward. Sony may be poised to become Kadokawa’s biggest shareholder, but it still only owns a 10% stake.

It’s possible future titles may be marketed more heavily on PS5, and the press release does allude to Sony expanding the “publishing of Kadokawa’s games”. But we can’t see any software suddenly becoming exclusive, and we think it’ll be business as usual at FromSoftware for the foreseeable future.

[source sony.com]