Shareholders Pressure FromSoftware to Cut Ties with Bandai Namco
An activist investor is currently making waves at Kadokawa, the parent company of FromSoftware, known for titles like Elden Ring and Dark Souls. The investors are pushing for a shift in how FromSoftware operates, expressing frustration over the financial arrangements with Bandai Namco and advocating for the studio to take the reins on publishing its own games.
This situation stems from a presentation by Oasis Management, an activist investor aiming to replace Kadokawa CEO Takeshi Natsuno, citing alleged mismanagement. One of their key arguments is that under Natsuno’s leadership, FromSoftware has missed out on significant revenue by allowing Bandai Namco and others to handle the publishing of games like Elden Ring.
The presentation emphasizes the massive success of Elden Ring, which was published by FromSoftware in Japan but handled by Bandai Namco internationally. It notes that over 90% of the game’s sales came from outside Japan, leaving Kadokawa with minimal benefits from its global triumph. Oasis argues that Kadokawa has expanded its workforce and capabilities, and with the gaming industry’s shift toward digital distribution, self-publishing has never been more feasible. They have been advocating for this move since 2020, and self-publishing was even part of Kadokawa’s management plans in 2023 before being dropped.
Oasis suggests that if FromSoftware were to create another blockbuster like Elden Ring, selling over 30 million units, the lack of self-publishing would again result in significant profits going to external partners instead of Kadokawa shareholders.
However, self-publishing all of FromSoftware’s titles could be complicated. While they fully own the Elden Ring trademark and could self-publish a sequel, they do not own the rights to Dark Souls, Demon’s Souls, or Bloodborne. Future titles in those franchises would require negotiations with Bandai Namco or Sony, who may be hesitant to relinquish publishing rights. This situation highlights a critical issue: FromSoftware lacks control over its most lucrative franchises, which could impact its future and shareholder interests.
On a positive note, FromSoftware’s upcoming title, The Duskbloods, is fully owned by the studio, including its publishing rights. This could suggest that Natsuno is beginning to steer the company toward self-publishing. Game development takes time, and Elden Ring was first revealed in 2019 with a pre-existing deal with Bandai Namco, a year before Oasis raised concerns about self-publishing. Additionally, Natsuno only became CEO in 2021, well after these agreements were made. Thus, the current situation may be more noise than a genuine crisis.
It’s also important to consider that Oasis is primarily focused on maximizing shareholder profits, particularly its own. This is the same company that once suggested Nintendo pivot to free-to-play mobile games and charge players to enhance gameplay, a move that doesn’t exactly inspire confidence in their understanding of the gaming industry.
Fans are worried that increased influence from Oasis, which now holds a 13.76% stake in Kadokawa—more than Sony—could lead to unwanted interference in FromSoftware’s creative processes. Director Hidetaka Miyazaki was approached for comment and expressed a desire to remain focused on game development without excessive outside pressure. He stated, “I’m not saying that there’s no room for improvement, but we can freely make the kind of games we want to make without excessive interference. The most important thing going forward is to maintain this environment and focus as much as possible on game development.”
The outcome of this situation will become clearer on June 24, when shareholders vote on Natsuno’s position at Kadokawa. The future of FromSoftware will depend on who takes over if Natsuno is ousted, how much sway Oasis has over the new leadership, and how involved they intend to be in the studio’s operations.
