Sony is in talks to purchase the media conglomerate that currently holds the reins to "Elden Ring" developer, FromSoft

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The deal may be just as much about purchasing anime IP as it is about buying up FromSoft.

Elden Ring character standing in a field.
(Image credit: Windows Central)

What you need to know

  • Reuters is reporting that Sony is in talks to purchase Kadokawa, a Japanese media publishing conglomerate.
  • Kadokawa currently owns FromSoft, the studio behind games such as the Dark Souls franchise, Elden Ring, and Armored Core.
  • Trading on Kadokawa stock has gone "bid-only" at the daily limit of 3,745 yen.

According to reports from Reuters, Sony is potentially in talks to purchase Kadokawa, the Japanese conglomerate and media powerhouse that currently holds the keys to FromSoft.

FromSoft titles are widely revered in the gaming space. The studio has created the iconic Dark Souls franchise, Bloodborne, the Armored Core franchise, and 2022's smash hit, Elden Ring. Elden Ring was particularly notable as it was developed in partnership with George R. R. Martin, the author behind the popular Game of Thrones series. Martin provided the narrative story for Elden Ring.

ELDEN RING - Story Trailer - YouTube ELDEN RING - Story Trailer - YouTube
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The game was already in the headlines following recent announcements that its Shadow of the Erd Tree DLC had received a nomination for Game of the Year from The Game Awards for 2024. The nomination sparked many to question whether a DLC should be considered a Game of the Year contender.

However, FromSoft may only be a small part of the reason behind Sony's interest in Kadokawa. Kadokawa has a robust cross-media catalog that consists of books, manga, film, and games alike. Sony may be looking to expand their publishing prowess further or to acquire anime and manga IP for the future in addition to adding FromSoft to its gaming portfolio. Sony already held a 2% stake in Kadokawa, as well as an additional stake in FromSoftware, and had already made anime a focus of growth ahead of the potential acquisition.

Sony's market value is currently sitting at roughly $115 billion, while Reuters reports that Kadokawa's market capitalization was around $2.7 billion. This isn't the first major acquisition Sony has attempted this year, as the Japanese company previously attempted to purchase Indian publisher ZEE Entertainment Enterprises. While that acquisition was originally announced in 2021, it failed to come to completion and the merger was ultimately scrapped in January 2024.

Sony's attempt at acquiring ZEE Entertainment was going to cost the company $10 billion. There has been no confirmation of how much Sony would be willing to purchase Kadokawa for, but if the ongoing talks are successful, a deal could be reached within weeks, according to sources who spoke to Reuters. Neither company commented on the report.

This story is currently developing...

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Cole Martin
Cole Martin
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Cole is the resident Call of Duty know-it-all and indie game enthusiast for Windows Central. She's a lifelong artist with two decades of experience in digital painting, and she will happily talk your ear off about budget pen displays. 

5 Comments Comment from the forums
  • fatpunkslim
    Given the poor management of their recent acquisitions, notably with Bungie or the closure of 5 studios this year, it would be surprising if they allowed themselves to be bought out like that, or at least not without major concessions and guarantees. Elden Ring , for example, have been huge successes in terms of multi-platform sales. And when you see the sales flop of recent PS exclusives like Until Dawn, Concord, the latest FF games, leogo horizon, or even Astro Bot, which sold only 1.5 million copies despite all the marketing around it, Kadokawa shareholders will never accept an exclusivity policy, and They would be foolish to let themselves be bought by Sony.

    Besides, I’m not sure that’s what Sony wants either; I think they’re taking the same direction as Xbox with a hybrid policy that mixes exclusives and multi-platform. This is what Sony’s management declared not long ago, leaning more towards multi-platform, as they need to adapt to the market’s evolution.

    The other question is about the monopoly, not so much in the video game sector, but in the manga and anime sector. However, since this is a takeover between Japanese companies, and their regulatory authorities are very lax .......
    Reply
  • GraniteStateColin
    fatpunkslim said:
    Given the poor management of their recent acquisitions, notably with Bungie or the closure of 5 studios this year, it would be surprising if they allowed themselves to be bought out like that, or at least not without major concessions and guarantees. Elden Ring , for example, have been huge successes in terms of multi-platform sales. And when you see the sales flop of recent PS exclusives like Until Dawn, Concord, the latest FF games, leogo horizon, or even Astro Bot, which sold only 1.5 million copies despite all the marketing around it, Kadokawa shareholders will never accept an exclusivity policy, and They would be foolish to let themselves be bought by Sony.

    The Board's obligation is to do what's best for their shareholders (assuming no poison pill that makes an acquisition problematic). If Sony is offering more for the company than the Kadokawa Board can calculate would be achieved through planned growth, then Sony's strategy, whether it involves taking FromSoftware titles exclusive, is largely irrelevant. Which will return greater value is the ONLY factor they should consider.

    Now, what's not clear to me in the article: is FromSoftware a wholly owned subsidiary of Kadokawa? By the relatively small total valuation of Kadokawa ($2.7B per the article), that would suggest, just based on the massive success of Elden Ring, that FromSoftware must be a significant portion of that value, but hard to tell for sure from such limited information. E.g., maybe they carry a lot of debt which reduces it. If FromSoftware is a stand-alone company and just partly owned by Kadokawa, then there may be other factors at play. Ultimately, Board members are still legally and ethically obligated to do what's best for their shareholders, but they could have growth plans or other long-term strategies that they genuinely believe are better to pursue than the value they get by selling to Sony now.

    Last point: to determine if the value of an acquisition exceeds the value the company's own operations would return, they need to compare the value in the growth of the cash (figure somewhere between a 5% - 10% rate of return on cash, because it would be invested) vs. their own growth expectations and select a reasonable time horizon (this time period can be somewhat subjective, hence the occasional lawsuits by shareholders). If the Board believes they can double the value of the company in 3 years and Sony is only offering 20% over current value, then that would be their reason NOT to sell. If they only foresee 10% growth of their own business and Sony is already offering that same 20% premium over the current stock price, then they must sell or risk shareholder lawsuits (which are disastrous, because even if they prevail, the case itself typically causes shakeups like people leaving the Board and senior management changes).
    Reply
  • Ron-F
    Seems to be a great acquisition for Sony, especially to compensate the fiasco of buying Bungie.
    Reply
  • ferlucio
    Not many things could kill the godlike idol that is FROMSOFTWARE but that would definitely be one of the ones that could. Killing gods is the thing Sony is particularly good at if you will.
    Reply
  • fdruid
    This would be very harmful for the gaming industry. We know what Sony does with franchises and games. Exclusivity is harmful for the industry. It's a cheap way to buy customers into their own plastic box and ecosystem. And Sony is more about their own very particular plastic box than MS is about having people play on theirs, since their games can be played on a lot more platforms, and big games like CoD are still multiplatform.
    Buying a successful big company that makes multiplatform games and making it an exclusivity machine should raise eyebrows from government anti-monopoly organizations like FTC. It's precisely what's wrong and what they spent years battling MS for. We'll see if they have a double standard like I believe.

    The future of gaming is looking grim if Sony takes hold of it, that's what I'm saying.
    Reply