After much talk of an acquisition, Sony and FromSoftware parent Kadokawa announce “strategic alliance”

There have been rumors circulating for some time that Sony is on the verge of acquiring Kadokawa Corporation, a massive Japanese media conglomerate that may not mean much to most people unless I mention that it is the parent company of Dark Souls developers FromSoftware and possibly Spike Chunsoft as well. Last month, Sony and Kadokawa were reportedly in talks, sparking speculation about things like the PC version of Bloodborne being sacrificed to ensure the exclusivity of Dark Souls 4 on the PS6. Now, the two companies have come out of negotiations and announced a “strategic capital and business alliance agreement.” What does this mean? Is it time to get excited yet?

Under the terms of the agreement, Sony will acquire 12,054,100 new shares in Kadokawa, totaling 50 billion yen by January 7, 2025. This will make Sony the largest shareholder of Kadokawa, holding around 10% of the company’s shares. While it’s not a full acquisition, it does give Sony significant influence over Kadokawa’s direction.

Kadokawa and Sony have collaborated on projects in the past, and this agreement opens the door for more joint ventures. According to the announcement, future collaborations could involve joint investments in content, discovering new creators, promoting media mixes of both companies’ intellectual properties, adapting Kadokawa’s IP into live-action films and TV dramas globally, co-producing anime, expanding global distribution of Kadokawa’s anime through the Sony Group, increasing publishing of Kadokawa’s games, and developing resources for virtual production.

In essence, they will be adapting and selling each other’s content worldwide, with a focus on games, anime, and other non-game works. The mention of “developing human resources to promote and expand virtual production” hints at potential collaborations in on-set virtual production using LED panels for real-time computer-generated graphics.

Kadokawa CEO Takeshi Natsuno is enthusiastic about the alliance, noting that it will strengthen their IP creation capabilities and expand their global reach with Sony’s support. Sony group’s COO and CFO Hiroki Totoki is also excited about the partnership, aiming to maximize the value of Kadokawa’s IP through collaborative efforts.

While the recent focus has been on North America and Europe, this non-merger is likely positive for job security in the short term, ensuring that no developers will lose their jobs due to cost-cutting measures post-acquisition. As of August, Kadokawa had 26 games in development.