Not enough: Kadokawa shareholders demand CEO's resignation over weak monetization of Elden Ring's success

Most likely, investors expected Kadokawa to turn Elden Ring into a theme park, sell sneakers with game symbols, and produce five TV series and three movies.

The success of Elden Ring, which has become one of the most popular souls-like games in recent years, has led to unexpected problems for Kadokawa Group. Despite multi-million sales, franchise development, and an adaptation announcement, some shareholders believe that the company's management failed to effectively capitalize on the project's commercial potential.

According to Reuters, Kadokawa's largest shareholder — the Hong Kong investment fund Oasis Management — is advocating for the resignation of the company's CEO, Takeshi Natsuno. The fund owns 13.76% of Kadokawa's shares and claims that the management made serious errors in managing assets related to Elden Ring.

According to Oasis Management, the company failed to maximize the benefits from the game's success. In particular, investors point to a decrease in Kadokawa's return on equity: while this figure was 9.4% in 2022, it fell to 0.5% last year. The fund also stated a "significant profit leakage" due to Kadokawa's publishing activities being limited to the Japanese market, while international distribution of games is handled by Bandai Namco.

Not only Oasis representatives are opposing the current head of Kadokawa. A report by the consulting firm Institutional Shareholder Services notes that, despite potential difficulties in finding a new leader, a change in CEO is a justified step. Glass Lewis, another influential company advising investors on corporate governance, took a similar stance.

The question of Takeshi Natsuno's future is expected to be one of the main topics at Kadokawa's annual shareholders' meeting, which will be held on Wednesday. For now, the company's head retains his position, but pressure from investors continues to mount.

The situation appears particularly noteworthy against the backdrop of the successes of FromSoftware — a subsidiary studio of Kadokawa that created Elden Ring. The game sold millions of copies, received numerous awards, and became one of the most successful new gaming franchises in recent years, yet some shareholders believe that the financial results of the parent company do not match the scale of this success.