Sony signs major deal with FromSoftware parent company

Summary

Sony invested $318 million to acquire over 12 million shares of FromSoftware parent company Kadokawa.
This increases Sony's stake in Kadokawa to 10%, making it the media giant's largest shareholder.
Sony and Kadokawa have also formed an alliance to expand their IPs globally.

Sony has entered into a $318 million investment deal to become the largest shareholder in Kadokawa Corporation, a Japanese media company and parent company of famed developer FromSoftware. This important development puts to rest, at least for now, several weeks of reports of a possible Sony takeover of Kadokawa.

Exactly a month ago, news that Sony was discussing a Kadokawa takeover unexpectedly broke, surprising gamers and industry analysts alike. It has been claimed that Kadokawa's prolific anime business is an important target for Sony, which already owns major anime streaming platforms Funimation and Crunchyroll. Kadokawa also owns a handful of well-known game studios, such as RPG Maker Developer Gotcha Gotcha Games, Octopathic traveler acquire developers, Danganronpa Developer Spike Chunsoft and of course Elden Ring Developer FromSoftware.

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Many in the gaming industry were divided over Sony's rumored acquisition of Kadokawa. One side argued that this made business sense, and the other side strongly opposed further industry consolidation. A month of speculation later, Sony has released a press release that finally provides clarity and confirms that this is officially the case 50 billion yen invested (over $318 million) to acquire more than 12 million new Kadokawa shares. With 10% ownership share Sony becomes Kadokawa's largest shareholder effective January 7, 2025. It is not a full takeover of Kadokawa as the rumors claimed, but a significant deal nonetheless.

The deal between Sony and FromSoftware parent company Kadokawa is explained

Sony will invest 50 billion yen to acquire 12,054,100 Kadokawa shares
Sony's stake in Kadokawa shares will increase to 10%
As of January 7, 2025, Sony will be Kadokawa's largest shareholder
Sony will help bring Kadokawa's IPs to a global audience
Sony could also help publish Kadokawa games

In parallel with the share acquisition, Kadokawa and Sony founded a “Strategic Capital and Business Alliance”. The motive of this collaboration is to expand the global reach of Kadokawa's extensive IP list. In addition to co-producing anime projects, Sony can leverage its established film and TV subsidiaries by converting Kadokawa's IPs into live-action films and TV shows. Interestingly, the press release also mentions that Sony is continuing to expand the release of Kadokawa games, which will most likely involve the PlayStation division.

This news is understandably a relief to those who have been opposed to the prospect of Sony buying out Kadokawa and gaining an exceptionally dominant position in the anime industry. Interestingly, it may also confirm recent rumors that Sony was put off by the high cost of the Kadokawa acquisition, estimated at around $4.3 billion or 675 billion yen. Regardless, Sony seems particularly interested in the variety of IPs Kadokawa owns and can help the media giant bring them to a global audience. If this deal delivers significant long-term returns for both companies, a full takeover may not be off the table.

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