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KADOKAWA Reports Growth In 2nd Quater Sales And Profits, Tencent Group Of China Becomes An Ally

Kadokawa cited the growth of the overseas business, licensing business, and digital book business in the publishing field as some of the factors for its high performance. 

Kadokawa

Kadokawa published on October 29 its earnings for its current fiscal year ending March 2022 through its second quarter.

The company reported net sales up to the second quarter were 104,811 million yen, 7.4% higher than the previous year’s 97,553 million yen.

Kadokawa also reported an operating income of 9,938 million yen (up 26.6%) and an ordinary income of 10,604 million yen (up 30.3%). The company’s net income for the period was 7,116 million yen (up 36.7%).

Kadokawa cited the growth of the overseas business, licensing business, and digital book business in the publishing field as some of the factors for its high performance. 

According to the reports, sales in the publishing division were 65,117 million yen (up 8.3%), and operating profit was 9,379 million yen (up 100.4%), showing particularly large growth in profits.

Paper publishing is growing mainly on Yen Press and the BOOK ☆ WALKER overseas store, which is a digital distribution for overseas markets, also achieved sales of over 300 million yen in the three months of the second quarter alone, achieving a high increase of 67% year-on-year.

In addition, the increase in license income and the decrease in the return rate also contributed to the profit. Hits include “Tezcatlipoca”, “Magic Fetal Movement”, “Pandorobou”, and “Bungo Stray Dogs (21)”.

Kadokawa reported sales and profits increased in the video division as well, with sales of 16,245 million yen (up 22.8%) and operating income of 1,027 million yen (up 22.0%).

The anime business, which has double-digit year-on-year growth, is leading the way; titles like “I’m a spider, what is it? , “The Saint’s Magic Power is Omnipotent”, as well as, “Re Zero: Life in a Different World from Zero”, “KonoSuba” are booming.

Animation production increased this term with 12 new titles have already released in the first quarter and 12 titles in the second quarter. It exceeded the previous year’s 7 and 11 bottles. Of the 24, 18 are TV series, 5 are movies, and 1 is OVA.

The main titles are “Re: Zero”, “Higurashi When They Cry”, and “The Detectives is dead”, “The Saint’s Magical Power is Omnipotent.” From the third quarter onward, “Sword Art Online the Movie-Progressive Starless Night Aria” and “Mieruko-chan” are expected to bring good luck.

To license and do business more smoothly in China, Kadokawa announced on Oct. 29 that Chinese internet conglomerate Tencent Holdings will acquire a 6.86% stake in Kadokawa for 30 billion yen (about US$264 million) and become the company’s third-largest shareholder.

Hong Kong-based Tencent subsidiary Sixjoy will buy 4.86 million shares for 6,170 yen (about US$54) per share, which is a 2.3% premium to its closing price. The transaction is expected to take place between November 15 and 26.

Kadokawa stated that it will enter an agreement with Tencent Group for the anime business “to further promote the company’s IP-based Global Media Mix,” and “to form a capital alliance with Tencent Group.”

The company will invest the entire proceeds in content by March 2024. This includes securing editors and producers.

The Master Trust Bank of Japan and Cacao-based investment fund KSD-NH will remain Kadokawa’s first- and second-largest shareholders following the transaction, and former representative director and president Nobuo Kawakami will become the fourth-largest.

Earlier this year, Kadokawa formed a capital alliance with CyberAgent, Inc., and Sony to strengthen its game and animation businesses.

Source: Animation Business Journal, Kadokawa IR, ANN

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