After much talk of an acquisition, Sony and FromSoftware parent Kadokawa announce “strategic alliance”

It’s been rumoured for a while that Sony are about to buy Kadokawa Corporation, a monolithic Japanese media conglomerate that means nothing to the bulk of you unless I append the magic words “parent company of Dark Souls developers FromSoftware” and possibly also, “parent company of Spike Chunsoft”. Sony and Kadokawa were reported to be in talks last month, fomenting all sorts of speculation about, say, the PC version of Bloodborne being ritually sacrificed to consecrate the PS6-exclusivity of Dark Souls 4. Now, the pair have emerged from the Cave of Haggling and announced… “a strategic capital and business alliance agreement”. What does this mean? Is it safe to scream yet?

Under the terms of the deal, Sony will acquire 12,054,100 new shares in Kadokawa totalling 50 billion yen by 7th January 2025. Together with the Kadokawa shares they already own, this will make them Kadokawa’s largest shareholder, with around 10% of Kadokawa shares overall. So, not quite an acquisition, then. But it does give them a lot of say over Kadokawa’s direction.

Kadokawa and Sony have collaborated on projects in the past. The agreement paves the way for more of that collaboration. According to an announcement release, future team-ups might include “potential joint investments in the content field, joint discovery of new creators, and joint promotion of further media mixes of both companies’ IP”. More specifically, they’re looking at “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.”

In short, they’re going to adapt and sell each other’s stuff worldwide, which could involve any number of games, but also, may apply predominantly to non-game works and especially anime. I’m a bit mystified by the phrase “develop human resources to promote and expand virtual production”. On-set virtual production, I gather, is when you use LED panels as a backdrop during the making of a film or TV show, allowing computer-generated graphics to appear in real-time. I’m not clear whether the press release is referring to this, however.

Kadokawa CEO Takeshi Natsuno is cock-a-hoop about the agreement. “This alliance is expected to not only further strengthen our IP creation capabilities, but also increase our IP media mix options with Sony’s support for global expansion, allowing us to deliver our IP to more users around the world,” he observed, with a slap of his thighs and a twinkle in his eye.

Sony group chief operational officer and chief financial officer Hiroki Totoki is similarly tickled. “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 ‘Global Media Mix’ strategy, aimed at maximizing the value of its IP, and Sony’s long-term vision, ‘Creative Entertainment Vision,'” he enthused. Is it safe to scream now?

I can’t speak to Kadokawa or Sony’s recent handling of such things, as we’ve been more focussed on events in North America and Europe, but the non-merger is presumably good news for sustainability in the short term, inasmuch as no Kadokawa or Sony developers will lose their jobs to post-acquisition “due diligence”, aka cost-cutting. As of August, Kadokawa had 26 games in development.