FromSoftware might become part of Sony Group. The Japanese company is reportedly in talks with Kadokawa, the parent company of the Elden Ring developer.
Elden Ring Shadow of the Erdtree
UPDATE (November 20): Kadokawa confirmed that it is aware of reports about its potential deal with Sony Group, saying that has received an “initial letter of intent” to acquire its shares. However, no decision has been made regarding the transaction. “If there are any facts that should be announced in the future, we will make an announcement in a timely and appropriate manner,” the Japanese company said in a statement.
If the talks are successful, Sony could sign a deal to purchase Kadokawa in the coming weeks, sources familiar with the matter told Retuers.
The main rationale behind the acquisition is PlayStation’s plans to expand its entertainment portfolio with strong IPs, which Kadokawa owns through FromSoftware (Dark Souls, Elden Ring).
Details of the negotiations remain undisclosed, so the sum of the possible transaction are unclear. Kadokawa currently has a market capitalization of $2.7 billion.
Kadokawa is a Japanese corporation that operates in various areas such as mass media, films, anime, publishing, and video games. In 2014, it acquired FromSoftware from its previous owner Transcosmos.
While the Elden Ring and Dark Souls maker is a wholly owned subsidiary of Kadokawa, it pretty much operates independently. In the fiscal year ended March 31, 2024, the studio generated ¥15.5 billion ($103.2 million) in revenue, down 29% year-over-year, accounting for more than 60% of Kadokawa’s total video game sales.
FromSoftware expects an improvement in the current fiscal year thanks to the release of the Shadow of the Erdtree DLC for Elden Ring, which sold over 5 million units globally in just three days.
Sony already owns 2% of Kadokawa shares. In 2022, it acquired a 14.09% stake in FromSoftware, helping the studio to strengthen its capabilities of new IPs and increase the scope of its publishing efforts in the global markets.
FromSoftware usually self-publishes its products in Japan, but partners with other companies in other regions. Fore example, Sekiro: Shadows Die Twice was distributed by Activision, while Bandai Namco published the global version of Elden Ring. So it will be interesting to see how this model will change if Sony acquires Kadokawa.
The partner relationship between Sony and FromSoftware dates back to the 1990s, when King’s Field released on the first PlayStation console. Games like Demon’s Souls and Bloodborne were also exclusive to Sony’s ecosystem.