Sony becomes largest shareholder in FromSoftware Parent Kadokawa, no full takeover at this time

Sony has invested 50 billion yen (about $318 million) in FromSoftware parent company Kadokawa, putting the brakes on a full takeover for now.

With the investment, Sony becomes the largest shareholder in Kadokawa with 10% of the company’s shares. Chinese megacorp Tencent is next in line.

Kadokawa and Sony have formed what the pair described as a ‘Strategic Capital and Business Alliance’, with the aim of boosting Kadokawa’s long list of intellectual properties globally.

The announcement of the deal includes vague company talk about how the two companies plan to work together in the future, but there is a line about adapting Kadokawa’s IP into live-action films and TV dramas globally, co-producing anime works and further expanding the release of Kadokawa’s games.

That line in particular has already sparked speculation that Sony may be helping to realize a live-action Elden Ring movie or TV series of some sort, but it’s worth pointing out that much of Sony’s interest in Kadokawa has with their anime business, as opposed to its video game business.

Sony CEO Hiroki Totoki commented, “Through this capital and business alliance, we will become the largest shareholder in Kadokawa, which consistently creates a wide range of IP, including publications and books, such as light novels and comics, as well as games and anime.

“Combining Kadokawa’s extensive IP and IP creation ecosystem with Sony’s strengths, which have 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, the ‘Creative Entertainment Vision’.”

Last month, financial experts said the PlayStation maker may have been put off the deal by the cost of having to acquire all of Kadokawa, rather than the parts it was actually interested in.

Kadokawa was reportedly only interested in making a deal with Sony if it bought the entire company. However, Sony was reportedly only interested in “extracting” assets related to anime and video games, which presumably included the developer of Elden Ring.

Buying all of Kadokawa would cost 640 billion yen (about $4.3 billion), according to expert estimates. Sony’s cash for buyouts is apparently tight at the moment due to investments made elsewhere. In comparison, Sony bought Destiny developer Bungie for $3.7 billion back in 2022. The studio has since suffered several rounds of layoffs and project cancellations.

There’s also the apparent prospect of a bidding war or the possibility of Sony buying 50% of Kadokawa and turning it into a subsidiary that it doesn’t fully own.

Kadokawa’s business extends into areas that fit into Sony’s broader entertainment offering, which includes anime, manga, television and film. Kadokawa is a prolific publisher of anime, and Sony already owns anime streamers Crunchyroll and Funimation. In addition to FromSoftware, Kadokawa owns Danganronpa developer Spike Chunsoft, Octopath Traveler developer Acquire and RPG Maker, and Pixel Game Maker developer Gotcha Gotcha Games. Kadokawa is the majority owner of FromSoftware, with about 70% of the company. Sony already owns about 14% of the developer, while Tencent owns about 16%.

For Sony, its games business has already suffered significant layoffs this year and the closure of several studios, including Concord developer Firewalk. In February it announced a round of layoffs affecting 900 employees, or about 8% of the global PlayStation workforce. The layoffs affected a number of PlayStation studios, including Insomniac, Naughty Dog, Guerrilla and Firesprite, but PlayStation’s London studio was hit the hardest with a closure announcement.

As for FromSoftware, it’s working on the cross-platform Elden Ring spin-off spin-off Elden Ring Nightreign, which will be released next year.

UPDATE: An earlier version of this story claimed that Sony had become the majority shareholder in Kadokawa, when in fact it has become the largest. An edit has now been made. We apologize for the error.

Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can contact Wesley at [email protected] or confidentially at [email protected].