As Sony’s pursuit of Kadokawa rumbles on, financial experts have said the PlayStation maker may find it hard to buy the entirety of FromSoftware’s parent company.
Japan’s Toyo Keizai (via Automaton) reported that Sony may be put off the deal due to the cost of having to acquire all of Kadokawa, rather than the parts it’s actually interested in.
Kadokawa is reportedly only interested in doing a deal with Sony if it buys the entire company. Sony, however, is reportedly only interested in “extracting” assets related to anime and video games, which presumably includes the developer of Elden Ring.
Buying all of Kadokawa would cost 640 billion yen (approx $4.3 billion), according to expert estimates. Sony’s cash for buyouts is apparently tight at the moment due to investments made elsewhere. As a point of comparison, Sony bought Destiny developer Bungie for $3.7 billion back in 2022. The studio has since suffered multiple rounds of layoffs and project cancelations.
There’s also the apparent prospect of a bidding war that would cause Kadokawa’s sale price to soar beyond Sony’s limit. The alternative is for Sony to buy 50% of Kadokawa and turn it into a subsidiary it doesn’t wholly own.
Kadokawa’s business extends into areas that fit into Sony’s broader entertainment offering, which includes anime, manga, TV, and film. Kadokawa is a prolific publisher of anime, and Sony already owns anime streamers Crunchyroll and Funimation. As well as 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 around 70% of the company. Sony already owns around 14% of the developer, with Tencent owning around 16%.
Piers Harding-Rolls, Research Director at Ampere Analysis, told IGN that news of a potential deal isn’t that surprising. "Sony’s interest in Kadokawa’s games publisher FromSoftware was made more concrete in 2022 when it acquired a roughly 14% share of the company following up on its long-time collaboration with the company," Harding-Rolls said.
"At the time, Sony mentioned a broader interest in cross-media development of anime and games IP to support its other media businesses. So, in that sense any deal for the parent company Kadokawa, which also operates extensively in manga and anime, is a natural extension of this earlier deal. These other areas align nicely with Sony’s anime businesses.
"The market conditions for acquisitions have changed dramatically over the last two years but Sony will always be looking for opportunities that can fuel its growth and that bolster its IP portfolio, and that represent value. There may also be a defensive element to this move. FromSoftware is an important partner for Sony’s games business, and it will not want a competitor taking control of Kadokawa and potentially disrupting that relationship. It helps that Kadokawa is also active in areas which are a strong fit with Sony’s wider business."
For Sony, its gaming business has already suffered significant layoffs this year and the closure of multiple studios, including Concord developer Firewalk. In February, it announced a round of layoffs affecting 900 staff, or about 8% of its global PlayStation workforce. The layoffs impacted a number of PlayStation studios, including Insomniac, Naughty Dog, Guerrilla, and Firesprite, but PlayStation's London studio was hit hardest with a notice of closure.
Photo by Yui Mok/PA Images via Getty Images.
Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.
