Entertainment company Sony (SONY) is increasing its stake in Japanese publishing company Kadokawa to the tune of $320 million. That will bump Sony’s stake in the company to about 10%, making it the largest shareholder. Investors will remember this comes after Sony was in talks to acquire all of Kadokawa. This news shows Sony wasn’t quite ready to drop an estimated $4.3 billion on the publisher.
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No matter the case, Sony and Kadokawa describe this new investment as a “Strategic Capital and Business Alliance.” The goal of this collaboration is to spread Kadokawa’s various intellectual properties (IPs) around the world.
Kadokawa is an IP powerhouse in Japan with a wide range of series and franchises under its control. Chief among these is FromSoftware, the video game development company behind Elden Ring, which has sold more than 28.6 million copies since its February 2022 release. Outside of video games, Kadokawa also owns several publishing houses that create manga and anime in Japan.
What This Means for Sony Stock
Sony will likely benefit from this deal as it gains preference for releasing Kadokawa IPs outside of Japan. It already has a strong relationship with FromSoftware on the video game front with a long history of exclusives for its consoles. Sony also owns anime publishing studio Aniplex and anime streaming service Crunchyroll, which recently absorbed dubbing studio Funimation and online retailer Right Stuf Anime.
Investors will also note that Sony is an entertainment company with its own production studios. It has used these to create live-action series for its video game franchises, such as The Last of Us and Twisted Metal. The collaboration with Kadokawa could result in Sony adapting some of its IPs into live-action series too.
Is Sony Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Sony is Moderate Buy based on two Buy ratings over the last three months. With that comes an average price target of $24, a high of $25, and a low of $23. This represents a potential 15.91% upside for SONY shares.
