The first earning report of Kadokawa Corporation with Sony owning 10% of shares

Kadokawa Corporation recently released its earnings report for the third quarter of fiscal year 2024, and the results have been quite promising. However, a significant development within the company has garnered considerable attention: Sony’s strategic investment in Kadokawa and its implications for FromSoftware, a subsidiary of Kadokawa known for its critically acclaimed video games.

Sony’s Stake in Kadokawa: In a strategic move, Sony has increased its ownership stake in Kadokawa to 10%, making it the largest external shareholder. This investment marks a significant milestone in the relationship between the two companies, which have a history of collaboration in various entertainment sectors, including gaming and media production.

FromSoftware’s First Earnings Report Under Sony’s Influence: With Sony’s backing, FromSoftware has reported its first earnings under this new partnership. The results have been encouraging, reflecting the potential synergies between the two companies.

• Revenue Boost: FromSoftware’s revenue saw a remarkable increase, driven by the successful launch of new game titles and the continued popularity of existing franchises like Dark Souls and Elden Ring.
• Market Expansion: Leveraging Sony’s extensive distribution network and marketing prowess, FromSoftware has been able to expand its market reach, particularly in North America and Europe.
• Enhanced Development Capabilities: The collaboration has enabled FromSoftware to access additional resources and expertise, leading to improvements in game development processes and overall product quality.

Financial Performance: Kadokawa’s overall financial performance for the third quarter ended December 31, 2024, has also shown positive growth.

Highlights:

• Sony’s Stake: Sony has increased its stake in Kadokawa Corporation to 10%, making it the largest shareholder.
• FromSoftware’s Earnings: With Sony’s backing, FromSoftware, known for titles like Dark Souls and Elden Ring, is expected to see significant growth in its earnings.
• Strategic Alliance: The partnership aims to enhance digital content and entertainment offerings, including joint ventures in live-action films, TV dramas, and anime.

Financial Performance:

• Revenue: Kadokawa reported a revenue of ¥21.12 billion for the third quarter ended December 31, 2024, which is approximately $139.8 million based on the current exchange rate of 1 USD = 151.41 JPY.
• Earnings: The company posted earnings of ¥1.75 billion for the trailing twelve months (TTM) ending December 31, 2024, which translates to approximately $11.5 million.
• Year-over-Year Growth: Kadokawa’s earnings for 2024 (TTM) showed a significant increase of 35.67% compared to the previous year.

Kadokawa’s strategic alliance with Sony and other partners has played a pivotal role in driving growth and innovation across its business segments.

• Business Alliances: In addition to the partnership with Sony, Kadokawa has formed a business alliance with Kakao piccoma to expand its digital content and entertainment offerings.
• Capital Alliances: The company has issued new shares through third-party allotments to strengthen its capital base, ensuring sustainable growth and resilience.

Looking ahead, Kadokawa remains optimistic about its growth prospects, driven by its strategic alliances and continued focus on digital content and entertainment. The partnership with Sony, in particular, is expected to yield long-term benefits, enhancing Kadokawa’s position in the global entertainment industry.

FromSoftware, as a key subsidiary, stands to gain significantly from this collaboration, with the potential for further innovation and success in the gaming sector.

In conclusion, Kadokawa’s recent earnings report and strategic alliance with Sony underscore the company’s commitment to growth and innovation. The positive impact on FromSoftware’s performance highlights the potential for continued success in the dynamic and competitive entertainment industry.