KADOKAWA CORPORATION

Business Details

Engages in publishing and sales of print books and magazines, publishing and sales of e-books and digital magazines, sales of Web advertising, and rights licensing, among others. Creates over 6,000 new IP titles annually, and the extensive accumulated archive of works serves as a driving force for Group growth. Serving domestic and overseas readers and licensees as customers, the segment contributes to maximizing LTV across the Group by stably supplying IP that becomes the source of media-mix development. Major subsidiaries include KADOKAWA CORPORATION, DWANGO Co., Ltd., YEN PRESS, LLC, Taiwan Kadokawa Co., Ltd., and Edizioni BD S.r.l.

Recent Overview

Revenue increased but profit fell 51.6% year on year, pressured by declines in e-books and licensing revenue and higher personnel costs

In the Publishing & IP Creation Business for FY2026 (ending March 2026), sales increased to ¥155,634 million (up 2.8% year on year), but segment profit fell sharply to ¥4,054 million (down 51.6% year on year). Declines in profit from domestic print books and e-books were significant, and rising personnel costs also pressured profit. Meanwhile, overseas business grew steadily in the US and Asia, and in May 2025 the company consolidated Italy's Edizioni BD S.r.l. (acquiring a 70% stake, with goodwill of ¥2,328 million), beginning European expansion. The number of new IP titles created increased 9.3% year on year. Impairment loss on fixed assets of ¥371 million was recorded (versus ¥63 million in the prior period).

Key Products

Growth Drivers

• Continued revenue growth in overseas business (US, Asia, Europe): YEN PRESS and Taiwan/Asia subsidiaries remain strong, and consolidation of Edizioni BD (Italy) has begun expansion into the European market. Global expansion of work distribution underpins sales
• Increase in the number of new IP titles created: Over 6,000 new IP titles were created in FY2026 (ending March 2026), up 9.3% year on year, continuously expanding the source of media-mix development
• Transformation toward a more profitable business structure through structural reforms: Organizational reform of the domestic publishing business, reduction of indirect costs through workflow improvements, downsizing/withdrawal from unprofitable businesses, and improving the return rate through manufacturing and logistics reforms
• Promotion of global multilingualization and simultaneous distribution: Investment in multilingual e-books, expansion of overseas distribution of print books, and expansion of the North American "Manga Spot" directly managed store network (currently 10 stores)
• Business alliance with note, inc.: Joint pilot initiatives to promote original work discovery and strengthen sales promotion, and to build a new AI-based data distribution model

Risks

• Structural contraction of domestic print books: The trend of smaller per-title sales continues, and profitability has declined due to compounding increases in material and logistics costs
• Hit-title dependency risk: Both e-book and licensing revenue are highly volatile depending on the presence of hit titles; a shortage of hits became apparent in FY2026 (ending March 2026), leading to a revenue decline
• Rising personnel costs and IP creation investment: Continued investment for medium- to long-term growth is pressuring profit, becoming a factor in the short-term decline in profitability
• Cyber-attack risk: The June 2024 cyber-attack caused a temporary sharp decline in shipment volumes of existing titles; a recurrence would have a significant business impact
• Goodwill amortization and impairment risk: The goodwill balance from M&A increased to ¥3,180 million at the end of FY2026 (ending March 2026) (versus ¥1,386 million at the end of the prior period), creating impairment risk if the performance of acquired companies deteriorates. An impairment loss on fixed assets of ¥371 million was recorded in the current period
• Slowing growth in domestic digital publishing: The pace of growth in domestic digital publishing has moderated compared to before, and revenue declined further due to the fading of the prior-year revenue boost from estimate-based recognition

Business Details

Engages in the planning, production, and distribution of animation and live-action films, licensing of video streaming rights and other rights, and sales of package software. Major subsidiaries include Kadokawa Daiei Studio Co., Ltd., Glovision Inc., Studio Kafka Co., Ltd., and ENGI Inc. The segment adapts IP generated by the Publishing & IP Creation Business into animation and live-action films, aiming to maximize IP LTV through licensing revenue from domestic and overseas streaming platforms and for games and merchandise. It plays a core role in the Group's media-mix strategy.

Recent Overview

Higher proportion of new animation titles and reversal from prior-period large-scale titles led to revenue decline and a swing to operating loss

Full-year sales for FY2026 (ending March 2026) were ¥47,218 million (down 5.6% year on year), and segment income/loss was ¥(465) million (a swing from profit of ¥4,729 million in the prior period to a loss). In animation, the higher proportion of new titles led to smaller per-title sales, resulting in a reversal from the prior period when large-scale titles such as the latest installment of a popular series contributed strongly. Live-action films also saw a revenue decline due to the reversal from the prior period's substantial secondary usage revenue from multiple titles. In addition, goodwill amortization of ¥2,700 million associated with an impairment of shares in a consolidated subsidiary was recorded as an extraordinary loss, causing the goodwill balance to decline sharply from ¥3,011 million to ¥148 million.

Key Products

Growth Drivers

• Consolidation of the Group's animation studios into the new Ikebukuro production hub "Studio One Base" to build an efficient operational structure capable of agile response to sequels of hit works
• Establishment in March 2026 of KADOKAWA Creators Co., Ltd., a new animation studio integrating young talent development and production, to stabilize and enhance production quality and support long-term talent development
• Establishment in March 2026 of Animex Inc., a domestic animation film distribution company jointly funded with Aniplex Inc., to build a foundation for theatrical animation hits
• Strengthened marketing focused on North America and enhanced work recognition through collaboration with overseas offices and partner companies, with a focus on rights sales and video streaming business
• Simultaneous realization of new visual expression and reduced environmental impact/low-cost production processes through Kadokawa Daiei Studio Co., Ltd.'s virtual production business
• Medium- to long-term revenue maximization through the accumulation of a multi-layered lineup of works based on over 6,000 new IP titles supplied annually in cooperation with the Publishing & IP Creation Business

Risks

• High dependency on hit titles in the lineup, creating risk of significant fluctuations in sales and profit during periods without major titles
• Continued trend of smaller per-title sales due to the rising proportion of new animation titles
• Continued sharp rises in production costs due to a shortage of domestic animation production talent, pressuring profitability through increased costs
• Downward pressure on streaming license unit prices due to intensifying competition in the video streaming market
• Risk of increased costs and extended payback periods associated with expanded investment in production studios (new location establishment, new company formation, etc.)
• Risk of recurrence of one-time losses such as the goodwill amortization (extraordinary loss of ¥2,700 million) associated with the impairment of shares in a consolidated subsidiary that occurred in the prior period

Business Details

Engages in the planning, development, and sales of game software and network games, as well as rights licensing. Major subsidiaries include FromSoftware, Inc., Spike Chunsoft Co., Ltd., and Acquire Corp. The segment develops and distributes high-quality console/PC titles domestically and internationally, boasting the highest operating margin within the Group. It plays a key role as a revenue source for the Group's global IP expansion and media-mix strategy.

Recent Overview

NIGHTREIGN performed well, but reversal from prior-period large-scale DLC led to an 11.4% decline in sales and a 20.9% decline in operating income

In FY2026 (ending March 2026), sales of FromSoftware, Inc.'s newly released title "ELDEN RING NIGHTREIGN" performed well domestically and internationally, but due to the reversal from the prior period's strong sales of "ELDEN RING SHADOW OF THE ERDTREE" DLC and main title repeat sales, sales were ¥29,636 million (down 11.4% year on year) and segment profit was ¥7,541 million (down 20.9% year on year). The operating margin remained the highest in the Group at 25.4%. For the next period, the company is expanding its production pipeline with titles such as "THE DUSKBLOODS" (scheduled for release in 2026) and "Super Danganronpa 2×2."

Key Products

Growth Drivers

• Expansion of the production pipeline through new titles from FromSoftware, Inc. such as "THE DUSKBLOODS" (scheduled for release in 2026)
• Continued sales in domestic and international markets leveraging the global brand power and development capability built up through the ELDEN RING series
• Expansion of the animation-adaptation development line in smartphone games and improved profitability through media-mix
• Continued contract development for other companies utilizing Group IP, along with ongoing development of series and new titles
• Benefits from market activation in the console game market due to the emergence of new platforms and turnover of top-selling titles

Risks

• High dependency on sales from a specific title (ELDEN RING series), creating risk of performance fluctuations tied to the new title release cycle
• Risk of revenue decline due to the reversal from strong large-scale DLC and repeat sales in the prior period (sales declined 11.4% and operating income declined 20.9% in FY2026, ending March 2026)
• While the global game market continues to grow, there is a risk that new entry into smartphone games is difficult due to entrenchment of top-ranking titles
• Risk of declining profit margins due to rising development costs and extended development periods
• Risk of demand fluctuation during transition periods to new platforms

Business Details

The Web Services Business is centered on DWANGO Co., Ltd., which operates the video community service "Niconico," plans and manages various events such as "Niconico Chokaigi," and distributes mobile content. As a platform connecting creators and fans, it forms one of the largest user-participation communities in Japan and plays a role in media-mix development in coordination with the Group's IP. In April 2025, BOOK WALKER Co., Ltd. and KADOKAWA Connected Inc. were integrated into DWANGO Co., Ltd., transitioning to a structure that consolidates the Group's engineering talent.

Recent Overview

Swing to profit due to the fading of cyber-attack impact and strong events, with sales up 13.7%

In FY2026 (ending March 2026), the Web Services Business achieved sales of ¥20,196 million (up 13.7% year on year) and segment profit of ¥2,117 million (versus an operating loss of ¥998 million in the prior year), marking a significant swing to profitability. The video community service benefited from recovery from the prior year, when the cyber-attack had a major impact. Large-scale events such as "Niconico Chokaigi 2025" and "Animelo Summer Live 2025" also performed well, and cost reductions in IT infrastructure expenses and other areas contributed to improved profit.

Key Products

Growth Drivers

• Normalization of video community service revenue following the complete fading of the cyber-attack impact
• Continued strong performance of large-scale events such as "Niconico Chokaigi" and "Animelo Summer Live"
• Improved profitability through cost reductions such as IT infrastructure expenses
• Improved Web Services customer experience and promotion of Group DX through consolidation of engineering talent at DWANGO Co., Ltd.
• Diversification of the revenue portfolio through maximization of the creator economy
• Expansion into the Asian market through overseas performances and major event appearances by Niconico creators and artists

Risks

• Risk of system outages such as cyber-attacks (concern over recurrence of the large-scale attack in June 2024)
• Intensifying competition in video community services (competition with global platforms such as YouTube)
• Risk of user churn from Niconico services (users settling into alternative services during the period of service suspension)
• Risk of fluctuations in attendance and costs in the events business
• Segment assets declined significantly year on year (from ¥6,549 million to ¥4,019 million), requiring attention to changes in the business foundation

Business Details

Centered on the provision of educational content and systems for N High School, S High School, and R High School, operated by DWANGO Co., Ltd., and creative vocational schools operated by Vantan Creative Vocational School Co., Ltd. In the internet-based correspondence high school business, continued growth in student enrollment has driven revenue, and the provision of educational systems and content to the online university "ZEN University" is also expanding. The segment provides high-value-added education leveraging the Group's IP and content assets, playing a role in the KADOKAWA Group's medium- to long-term growth strategy.

Recent Overview

Achieved higher revenue and profit, driven by increased student enrollment and expansion of new schools

In FY2026 (ending March 2026), sales were ¥17,162 million (up 13.5% year on year) and segment profit was ¥2,844 million (up 19.4% year on year), achieving both higher revenue and profit. The main factors were the opening of new schools such as the "KADOKAWA Anime & Voice Actor Academy" and expansion of operating areas at Vantan Creative Vocational School Co., Ltd., along with increased student enrollment from the establishment of R High School and ZEN University at DWANGO Co., Ltd. Depreciation and amortization increased significantly from ¥398 million to ¥1,029 million, reflecting upfront investment such as new campus openings.

Key Products

Growth Drivers

• Continued increase in student enrollment through the opening of new campuses for the in-person courses of N High School, S High School, and R High School
• Expansion of educational content and system provision through the establishment and expansion of R High School and ZEN University
• New school openings (such as the KADOKAWA Anime & Voice Actor Academy) and expansion of operating areas at Vantan Creative Vocational School Co., Ltd.
• Expansion into new fields, such as music creator training starting in April 2026
• Development of high-value-added educational content leveraging the KADOKAWA Group's IP and content assets
• Expansion of the operational support business for other educational institutions

Risks

• Risk of increased expenses from upfront investment such as new campus openings and system development associated with increased student enrollment (depreciation and amortization increased approximately 2.6 times year on year)
• Risk of intensifying competition and regulatory changes in the correspondence high school market
• Risk of technical failures and cybersecurity issues in the development of educational content and systems (lessons learned from the Group-wide cyber-attack damage)
• Uncertainty regarding monetization during the launch phase of new businesses such as ZEN University
• Segment assets declined from ¥14,538 million to ¥13,189 million in the prior period, requiring attention to changes in asset efficiency

Business Details

Comprises the Merchandising Business (character goods) for the planning and sale of character goods, the facility operations business including Tokorozawa Sakura Town (such as the Kadokawa Culture Museum), the advertising agency business (Kadokawa Media House Co., Ltd.), and event production and operation (Yellow Jam Co., Ltd., SOZO Pte. Ltd.), among others. This segment aggregates businesses not included in the reportable segments, handling the merchandise and real-world experience domains of the Group's IP, while structurally continuing to record operating losses.

Recent Overview

Strengthened Southeast Asian events through the SOZO subsidiary; loss improved by ¥238 million year on year

In FY2026 (ending March 2026), sales were ¥17,031 million (down 4.7% year on year), and the segment loss was ¥3,966 million (improved from a loss of ¥4,204 million in the prior period). The Merchandising Business saw declines in revenue and profit due to the reversal from a hit product in the prior period. The Recreation Business saw revenue growth from strong performance of IP events in major domestic cities, but profit declined due to the reversal from prior-period large-scale events and merchandise sales. In November 2025, the company made SOZO Pte. Ltd. (operator of "AFA," one of Southeast Asia's largest animation events) an 80%-owned subsidiary, increasing segment assets. Following the absorption-type merger of KADOKAWA Connected Inc. into DWANGO Co., Ltd., the positioning of the DX function changed, but the impact on the consolidated group as a whole was minimal.

Key Products

Growth Drivers

• Expansion of the animation and music events business in Southeast Asia through the consolidation of SOZO Pte. Ltd. as a subsidiary
• Continued strong performance of IP events (Recreation Business) in major domestic cities
• Improved profitability through co-creation with diverse specialized partners at Tokorozawa Sakura Town
• Digital and global expansion of the Merchandising Business, including overseas merchandise sales and online lottery-style sales
• Transition to a sustainable business structure through cost optimization in the facility operations business

Risks

• Structural operating losses continue, with an unclear outlook for a return to profitability
• The Merchandising Business has high dependency on hit merchandise, creating risk that poor performance of specific titles directly impacts results
• The facility operations business bears a heavy fixed cost burden, creating high risk of fluctuation in visitor numbers and event attendance
• Risk of future additional acquisition consideration arising from the performance-linked earn-out provision related to SOZO Pte. Ltd.
• Businesses dependent on internal Group transactions have low independent earning power in the face of changes in the external environment