Sony becomes a top Kadokawa shareholder
Plus: Crunchyroll's anime streaming growth falters; Toho earns majority of domestic box office revenue; Kadokawa CEO addresses share acquisition talks; and more
This is your weekly Animenomics briefing, covering the business of anime and manga. Today is Wednesday, December 25, 2024.
Programming note: Merry Christmas! Animenomics will be on break next week. The next newsletter issue will be in inboxes on Wednesday, January 8, 2025.
Sony raises stake in Kadokawa, plans anime partnership
Entertainment conglomerate Sony Group will pay nearly ¥50 billion (US$320 million) to increase its shareholding in Kadokawa and help the publishing giant fund anime and media mix IP creation and distribution.
Why it matters: The joint announcement ends speculation stemming from a Reuters report last month that Sony was considering acquiring Kadokawa in a deal that would have significantly reshaped the Japanese entertainment industry.
The details: Kadokawa will use ¥20 billion (US$128 million) from the proceeds of the deal by 2030 to create, develop, and acquire new anime, live-action, and video game IPs.
The effort could involve an expansion of Kadokawa’s Kakuyomu user-generated web novel platform, which already has 1.2 million registered users and 720,000 works uploaded.
Kadokawa may also seek to partner with or acquire other publishers, anime studios, and video game companies domestically and abroad in deals ranging from ¥100 million to ¥5 billion (US$630,000 to US$32 million).
It will use the remaining ¥29.7 billion (US$190 million) to increase distribution in English-speaking and Chinese-speaking markets and to build manufacturing, distribution, and sales operations abroad.
One more thing: The deal also calls on Sony to help distribute Kadokawa’s e-book and digital manga titles, but Sony doesn’t operate a digital manga platform today.
Rewind: Earlier this year, Sony Music Entertainment made a bid to acquire the Mecha Comic digital manga platform, but lost to investment giant Blackstone.
Between the lines: Kadokawa’s issuance of more than 12 million new shares to Sony makes the conglomerate one of the publisher’s largest shareholders, controlling 9.68 percent of shares and 10.11 percent of voting rights.
Sony will also gain a seat on Kadokawa’s board of directors. In exchange, it has agreed not to acquire any more shares at this time, Nikkei Asia reported.
By contrast, South Korean Internet and webtoon giant Kakao doesn’t have a seat on Kadokawa’s board despite having a large shareholding through a trust account.
Crunchyroll growth falters as anime competition grows
Anime streaming service provider Crunchyroll, which Sony Pictures acquired in 2021, is stumbling through a number of growth initiatives as it faces growing competition from mainstream streaming platforms, Bloomberg reports.
Why it matters: Results of a Parrot Analytics survey announced last week show that Netflix has overtaken Crunchyroll in streaming video subscription revenue attributable to anime viewers.
By the numbers: Anime viewers generated about US$5.5 billion in global subscription revenue for streaming video platforms last year, accounting for 6 percent of all global streaming revenue.
Netflix’s more than US$2 billion subscription revenue made up 38 percent of total anime streaming revenue, thanks to the sheer scale of its subscriber numbers.
What’s happening: Crunchyroll insiders told Bloomberg that the platform will likely miss an internal goal to have 25 million paid subscribers by the end of 2025.
An internal document seen by Bloomberg says Crunchyroll wants to keep monthly churn below 8.5 percent, which means it’s still rebuilding two-thirds or more of its user base year after year.
The intrigue: Three Japanese anime industry employees told Bloomberg they don’t consider sales data reported by Crunchyroll for revenue-sharing purposes trustworthy.
Revenue-sharing was Crunchyroll’s first business model as it switched from user-uploaded content to licensed anime in 2009.
Yes, but: As previously reported by Animenomics, Crunchyroll has rapidly grown direct investments in anime IP since the Sony acquisition, so it’s no longer solely reliant on revenue-sharing as a means to acquire content for the platform.
Clippings: Toho sweeps up ¥90b in domestic box office
Full-year box office revenues of films distributed by Toho in 2024 are expected to exceed a cumulative ¥91 billion (US$580 million) domestically. The company’s films account for 58 percent of Japan’s total box office revenues. (Oricon News)
As previously reported by Animenomics, Toho also leads in the anime film category, occupying the top three positions in anime box office revenues.
After acquiring a number of anime studios this year, Toho is also acquiring a 19.7 percent stake in 3D CG anime studio Orange, the latter announced last week.
Anime broadcaster Animax will launch a new live entertainment business in China and Southeast Asia with Japanese voice actor and artist agency HoriPro International and HoriPro-backed joint venture HT Entertainment. (Animation Business Journal)
Director Mamoru Hosoda’s latest anime film Scarlet will open in theaters in Japan at the end of 2025 with Toho handling distribution. Sony Pictures is co-producing the film with Studio Chizu and Nippon TV and will also distribute it internationally. (Variety)
Kiyotaka Oshiyama’s Look Back anime film is a nominee for Best Independent Animated Feature in the 52nd Annie Awards. Best Animated Feature nominations include the American–Japanese co-production Ultraman: Rising. (Cartoon Brew)
South Korea’s culture ministry will invest ₩13.5 billion (US$9.3 million) toward the overseas expansion of manhwa and webtoons in 2025, more than double this year’s amount, as webtoon businesses scale back from weak profits. (The Chosun Biz)
Osaka’s upcoming Expo 2025 will hold an Anime Manga Tourism Festival over three days in April and May, with Cool Japan promoters showcasing regional food, culture, and products through anime and manga. (Cabinet Office of Japan)
Kadokawa CEO: No threat from shareholder changes
“I don’t see [the acquisition of shares] as much of a threat because the fact that so much IP is available now is due to the cultural background of Japan and the diversity of young people’s expressions. These things are the background from which manga and anime emerged, and no one would want to buy [their businesses] and let them go to waste. In that sense, I don't think the ecosystem will change just because the shareholder composition has changed, so I don't think it's much of a threat.”
— Takeshi Natsuno, Kadokawa Corporation chief executive officer
Context: Natsuno, in an exclusive interview with Nippon TV News, downplayed concerns about growing interest by conglomerates and private equity groups in acquiring shares of Japan’s anime and manga companies amid their global boom.
The interview aired last week, but was conducted before news of Sony’s share purchases in Kadokawa was announced on Thursday.
1 last thing: Animenomics saw a breakout year in 2024
Anime and manga’s industry developments were at the forefront of the entertainment business in 2024, and Animenomics was there to report on all the important stories from week to week.
Driving the story: Animenomics reported on over 400 news items in the anime and manga business this year, more than double the volume of business news reported by the next English-language anime and manga publication.
By the numbers: Over 2,000 people started subscribing to Animenomics in the last 12 months, and paid subscribers have grown from 3 to 24.
Monthly views peaked in November thanks to two big stories: anime’s surging overseas market and media reports of a potential Sony acquisition of Kadokawa.
Zoom out: Animenomics was interviewed throughout the year by media outlets and publications like The Japan Times, Nikkei Asia, and TV Tokyo.
Our reporting was also cited by publications like Semafor, Anime News Network, and Music Business Worldwide.
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Congrats on the growth, Richardson! Fantastic to see Animenomics succeed. Keep up the great work!
Great read, thanks for all the insightful info!