Elden Ring's Profit Leakage Sparks Investor Frustration
Elden Ring has proven to be a monumental success in the gaming industry, selling over 30 million copies as of April 2025. Despite this, Kadokawa Corporation, the parent company of Elden Ring developer FromSoftware, is facing mounting pressure from shareholders. According to a Reuters report, a significant number of investors are pushing for CEO Takeshi Natsuno to step down due to what they describe as "profit leakage." This term refers to the failure to capitalize fully on Elden Ring's commercial success, particularly through partnerships with external publishers.
The Impact of External Publishing Partnerships
The issue lies in how Kadokawa has handled the publishing of Elden Ring. While the game is published by Kadokawa in Japan through FromSoftware, Bandai Namco handles the global publishing. This arrangement has led to a significant loss of potential revenue for Kadokawa. Oasis Management, one of the most active activist investors in Japan and now the largest single shareholder of Kadokawa with nearly 14% of the company, has called for a change in strategy. In a recent press release, Oasis highlighted that FromSoftware is a "crown jewel asset" but criticized Kadokawa for not fully capturing the economic value from its titles.
Oasis has long advocated for a more ambitious approach to capturing the full value of FromSoftware’s success. The company previously committed to self-publishing under its mid-term plan and even raised money in 2022 to facilitate this. However, CEO Natsuno has since retreated from that commitment, leaving shareholders confused and dissatisfied. Oasis is not demanding immediate self-publishing of every title but is calling for transparency, discipline, and a credible plan to improve gaming economics.
Other Concerns for Investors
Natsuno's challenges extend beyond Elden Ring. A 2024 data leak reportedly cost the company millions, which did not sit well with shareholders. Additionally, investors were disappointed when a potential acquisition by Sony turned into a strategic alliance where Sony only acquired a 10% stake in the company. These issues have further fueled investor frustration with Natsuno's leadership.
Despite Natsuno surviving the annual general meeting, the actual results of the vote will not be known for several days. If his support has dropped significantly, he may be forced to implement the changes desired by Oasis and other activist investors. The pressure on Kadokawa to improve its strategy and governance is mounting, especially as Elden Ring continues to dominate the gaming landscape.
