Sony has been on an anime buying binge of late, having purchased streaming services Funimation and Crunchyroll, along with retailer Right Stuf, which were rolled into Funimation under the Crunchyroll brand. To top that off, Sony then set its sights on Kadokawa, a much bigger prize.

Kadokawa is one of the top three publishers in Japan, ranked slightly behind Shueisha and Kodansha.

In late 2024, Kadokawa and Sony confirmed reports that Sony was in talks to acquire Kadokawa. A buyout is not off the table, but effective as of January 7, Sony will instead take a 10 percent stake in Kadokawa (in newly issued shares) as part of a "strategic capital and business alliance."

Sony does not have a traditional publishing arm. As Sony Chief Financial Officer Hiroki Totoki explained earlier this year,

Whether it's for games, films or anime, we don't have that much IP that we fostered from the beginning. We're lacking the early phase (of IP) and that's an issue for us.

Sums up the Financial Times,

Sony is betting on a multibillion dollar push into producing more original content, as part of a creation shift the Japanese tech giant hopes will win it a greater share of the three trillion dollar entertainment industry.

The alliance will give Sony first dibs on Kadokawa's enormous catalog of manga and light novels. In exchange, Kadokawa ends up with much deeper pockets that it will use for "creating, developing, and acquiring new IP." Collaborative projects being discussed include initiatives to adapt

Kadokawa's IP into live-action films and TV dramas globally, co-produce anime works, expand global distribution of Kadokawa's anime works through the Sony Group, further expand publishing of Kadokawa's games, and develop human resources to promote and expand virtual production.

Crunchyroll obviously stands to benefit from the deal too. The acquisition of Crunchroll made Sony the dominant anime distributor in North America, though with Hidive, Netflix, Amazon Prime, and Tubi actively acquiring content, it can't be technically said to hold a monopoly position.

In publishing specifically, Kadokawa still has a huge competitor in the Hitotsubashi Group.

The Hitotsubashi conglomerate includes Shogakukan, Shueisha, Hakusensha and related subsidiaries, such as Viz Media in the United States. Given that Shueisha alone is bigger than Kadokawa (and together with Shogakukan is twice its size), the Kadokawa deal likely won't trigger any antitrust issues.

The bigger risk with these sorts of mashups is that the customer, responsible for the success of the enterprise in the first place, gets lost in all the bigness.

Labels: anime, business, crunchyroll, kadokawa, manga, netflix, publishing, sony, tubi