Sony's Proposed Acquisition of Kadokawa Could Change How Japanese Media Is Distributed Globally

Global multinational conglomerate Sony Group has reportedly shown interest to buy Kadokawa, Japan's biggest media conglomerate. Given how Kadokawa's business spans multiple media verticals–from publications to animation studios–the purported deal will have a significant impact on how Japanese media and entertainment will be distributed globally.

Details About The Reported Deal

In a report from Reuters, two sources familiar with the matter confirmed that both Sony and Kadokawa are in talks regarding the deal. Should discussions succeed, sources say that a confirmed deal may be announced in the following weeks.

While both parties have declined to comment regarding the nature of the deal discussions, it is worth noting that Sony already has an existing stake at FromSoftware, a game development company owned primarily by Kadokawa. Some of the studio's most popular game titles include Dark Souls, Bloodborne, Sekiro, and most recently Elden Ring.

Understanding Kadokawa's Diverse Portfolio

Since its founding in 1945, Kadokawa's portfolio has expanded not just in publishing, but also in game development and publishing, as well as in producing anime–the popular type of animation in Japan, which has grown into an estimated value of US$2.3 billion, according to Nikkei.

Under its publishing portfolio, Kadokawa handles brands such as BookWalker, Gaspereau Press, and Kadokawa Future Publishing which handles specific magazines like ASCII Media Works, Enterbrain, Fujimi Shobo, and Media Factory. Meanwhile, aside from FromSoftware, Kadokawa also has a stake in gaming brands such as Spike Chunsoft and Acquire.

Over at the anime production side, the conglomerate owns Doga Kobo, Studio Kadan, Movie Walker, as well as stakes at ENGI (53%) and Kinema Citrus (31.8%). It also owns the telecommunications and media company Dwango which operates the Japanese video platform Niconico.

In terms of its reach overseas, Kadokawa has subsidiaries handling specific brands such as publishing company J-Novel Club, manga and anime publication Anime News Network, as well as US-based publisher Yen Press, co-owned with French publishing house Hachette Book Group. The conglomerate also has subsidiaries in Hong Kong, Taiwan, Indonesia, Thailand, and China.

Kadokawa had also received significant investment from Chinese tech conglomerate Tencent amounting to US$264 million or around a 6.86% stake in the media giant.

Sony's Continued Growth In The Media Space

One of Sony's biggest gambles in extending its media reach in terms of Japanese entertainment is its acquisition of the popular anime streaming service Crunchyroll. In 2021, Sony–through its streaming service Funimation–completed the acquisition of Crunchyroll from AT&T for US$1.175 billion.

Following the completion of the deal, Funimation moved all of its content to Crunchyroll in 2022. As Crunchyroll became the existing entity following the merger, the platform had also acquired anime retailer Right Stuf.

Given Sony's gamble into expanding Japanese media offerings to a global audience is rampant, the platform also made strides into expanding into other markets such as in Southeast Asia amidst rising anime consumption. Despite that, many also lament that the mergers have also made accessing anime in certain markets impossible, such as in Australia.

What's Next On This Deal?

If the reports of Sony acquiring Kadokawa prove true, the deal could mark a transformative moment for the entertainment landscape, both in Japan and globally. By bringing Kadokawa's vast library of anime, manga, and publishing assets under Sony's umbrella, the company could significantly bolster its media dominance, particularly in the anime industry, where it already holds a strong position through subsidiaries like Aniplex and Crunchyroll.

For fans, this could mean greater global access to Kadokawa's iconic titles and potential new cross-media projects leveraging Sony's technological and creative expertise. As both companies remain tight-lipped, the entertainment world eagerly watches for confirmation and what could be a game-changing partnership in the industry.