If there’s one lesson the entertainment industry keeps learning the hard way, it’s this: audiences love what they already love. Kadokawa, one of Japan’s most powerful media empires, decided to go against that grain, and the numbers just told the story loud and clear.
The company’s operating profit fell 59.7% to 6.38 billion yen over the nine months ended December 2025, with overall revenue dropping just 1.7%. That gap between revenue and profit is the real red flag here. It’s not that people stopped buying; it’s that everything cost way more and delivered way less.
When new bets don’t pay off
The core of the problem was a strategic decision that, in theory, sounds completely reasonable: invest in fresh, original anime adaptations instead of relying on established sequel machines. Noble idea. Rough execution.
Kadokawa’s anime business slipped into the red and posted a net loss of around 940 million yen (roughly $6.13 million USD).
The company attributed this to a big chunk of its lineup being made up of first-time anime adaptations, leading to lower revenue per title compared to established, popular series. In other words, without the built-in fanbase that a Re:Zero Season 3 or a KonoSuba sequel brings, every new title is basically a gamble.
And gambling with an entire season’s lineup? That’s expensive.
Publishing wasn’t spared either, that segment’s operating profit crashed 90.2%, falling to just 623 million yen. A 90% drop. In publishing. From a company whose entire identity is built on manga and light novels. That one stings.
The few bright spots holding things together
To be fair, it wasn’t a complete disaster across the board. Web services revenue jumped 21.5%, swinging to a 2.19 billion yen operating profit from a loss the previous year, boosted by a recovery after last year’s cyberattack and successful events like Niconico Chokaigi 2025. Education also held strong, with revenue rising 13.4%.
And then there’s FromSoftware. Elden Ring Nightreign, which released this fiscal year, continues to perform well both domestically and internationally, basically acting as the company’s financial lifeline while the anime side figured things out.
Despite the return of the highly anticipated Oshi no Ko Season 3 in January, Kadokawa expects to end its current fiscal year with a 38.1% drop in operating profit to 10.3 billion yen. So even with one of the most-hyped anime comebacks in recent memory, the full-year forecast still looks rough.
It’s a classic case of a company doing everything “right” on paper, diversifying IP, launching new stories, expanding internationally, and still getting hit hard because the market rewards certainty over creativity, at least in the short term.
Kadokawa isn’t down for the count, but this is definitely a wake-up call.
What do you think, should Kadokawa keep pushing for fresh, original anime or just stick to the sequels fans already love? Drop your take below, we want to hear from you!