Kadokawa Reports Losses Due to Decline in Popular Anime Sequels

Kadokawa, the company behind many popular franchises and owner of FromSoftware, revealed that its anime division entered the red during the current fiscal year, drawing significant attention across the industry.

Kadokawa Reports Losses Due to Decline in Popular Anime Sequels

According to the financial report covering the first three quarters of the fiscal year ending March 31, 2026, Kadokawa reported a significant decline across multiple business segments. Its publishing division, which includes manga, physical books, and e-books, saw growth overseas, especially in the United States and Asia. However, despite this international growth, total profit in the segment dropped by approximately 90.2% compared to the previous year.

The company explained that this decline was mainly due to lower profit per title in Japan, along with increased personnel costs, which further reduced profit margins.

In the gaming sector, the situation was slightly different. Profit fell about 7% year-over-year, but this was largely due to exceptionally strong results in the previous fiscal year, driven by the massive success of Elden Ring and its expansion Shadow of the Erdtree. Meanwhile, the new title Elden Ring Nightreign, released during the current fiscal year, continues to perform well both domestically and internationally.

However, the biggest impact came from the anime and film division. Kadokawa reported losses in its anime business totaling approximately 940 million yen, or about 6.13 million USD. According to the company, the main reason was the lack of popular anime sequels in its recent lineup.

Instead of focusing mainly on sequels to already established and successful series, Kadokawa invested more heavily in new adaptations. While new titles can become successful in the future, they typically generate less revenue initially compared to sequels from well-established franchises.

This highlights how anime sequels play a crucial role in maintaining financial stability for companies in the industry, as they benefit from an existing fanbase and stronger potential for merchandise, streaming, and physical media sales.

For the remainder of the fiscal year, Kadokawa expects weaker performance across its key financial metrics. The company forecasts total revenue of 278.2 billion yen, a modest increase of 0.1% compared to last year. However, operating profit is expected to decline by 38.1%, ordinary profit by 30.1%, and net profit by 33.7%.