The publishing giant says market saturation and lack of originality contributed to a major decline in earnings.
Japanese publishing giant Kadokawa released its consolidated earnings report for the fiscal year ending March 2026 last week 14 May, revealing a 51.3% drop in operating profit compared to the previous year.
According to the report, the company’s core publishing and IP creation business suffered heavily in particular, recording a 51.6% decrease in operating profits year-on-year.
Why does Kadokawa think profits have declined?
In its newly-released mid-term management plan covering the fiscal years of 2026 to 2031, Kadokawa pointed to what it described as an “excessive reliance on existing winning patterns.”
The company specifically acknowledged a growing dependence on “proven genres” such as isekai and narou titles, saying the trend that they had cultivated has now contributed to market saturation and worsening profitability.
Kadokawa has held dominance in the isekai genre in the past couple of years, with numerous popular titles, like Re:Zero and Konosuba included in their roster.
However, according to Kadokawa, the industry’s formulaic approach, combined with a lack of content diversity, has limited the company’s ability to explore new genres and invest in more innovative projects.
The company also admitted that efforts to rapidly increase the number of published titles by hiring more editors created additional problems, leading to what it described as an increase in works “lacking originality or quality", ultimately failing to result in the creation of any hit titles.
What changes is Kadokawa making?
To address the issue, Kadokawa says it plans to rebuild its genre strategy while introducing stricter standards for approving projects.
The company is also restructuring its publishing division through its Publication Steering Committee, which was established in November 2025 to oversee what Kadokawa calls “fundamental structural reforms.”
Additionally, Kadokawa announced an early retirement program aimed at creating what it described as a “leaner and more efficient organizational structure.”
Beginning 1 June of this year, employees aged 45 and older with at least five years at the company will be eligible for voluntary retirement packages, which include additional severance pay and optional re-employment support.