Sony Eyes Japan's Kadokawa to Strengthen Gaming and Anime Dominance

Sony Group Corp SONY is reportedly considering acquiring Japanese publisher Kadokawa Corp. This move could significantly enhance its content offerings and strengthen its position in gaming and anime markets.

The two companies have discussed a potential deal, Bloomberg reports.

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The acquisition would grant Sony access to Kadokawa’s extensive intellectual property portfolio, including manga, anime, and films, as well as its stakes in FromSoftware Inc, the Japanese studio behind the hit video games Elden Ring and Bloodborne.

This strategic move aligns with Sony’s ambition to expand its gaming and anime dominance, bolstered by Kadokawa’s valuable library and global appeal.

Sony already holds a 2% stake in Kadokawa and has an investment in FromSoftware Inc, the subsidiary behind the hit game Elden Ring, Reuters reports.

Developed in collaboration with acclaimed director Hidetaka Miyazaki and author George R.R. Martin, the game has sold 25 million copies worldwide. Its expansion, Shadow of the Erdtree, achieved impressive success, selling 5 million units within three days of release in June.

The studio’s renowned titles have been significant drivers of PlayStation’s success, making its integration with Sony a lucrative prospect.

Adding Kadokawa’s assets to Sony’s existing holdings, including anime producer Aniplex Inc, could solidify Sony’s position as a formidable competitor in the global anime market.

Tomoaki Kawasaki of Iwaicosmo Securities told Bloomberg that Kadokawa’s content lineup centered on anime would complement Sony’s strategy to leverage intellectual property across multimedia platforms.

Kadokawa has faced challenges recently, including a significant data breach impacting over 250,000 individuals and reduced income forecasts. Additionally, former chairman Tsuguhiko Kadokawa, the founder’s son, resigned two years ago after being indicted on bribery charges linked to the Tokyo Olympics.

Sony held 2.13 trillion Japanese yen in cash and equivalents as of September. It reported fiscal second-quarter 2024 consolidated sales growth of 3% to $19.44 billion (2.91 trillion Japanese yen), missing the analyst consensus of $19.62 billion. 

Game & Network Services (G&NS) revenue increased 12% to 1.07 trillion Japanese yen, and operating income climbed 184% to 138.8 billion Japanese yen.

Price Action: SONY stock traded lower by 0.05% to $18.96 at the last check Tuesday.

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