Elden Ring and its expansion, Shadow of the Erdtree, have emerged as a powerful catalyst for the thriving performance of their parent company's gaming division. Delve deeper to understand the recent security incident and Kadokawa's financial performance within its gaming sector.
Elden Ring and DLC Propel Kadokawa’s Game Sector Sales
Kadokawa’s Security Breach Incurs $13 Million in Losses
On June 27, the notorious hacking group Black Suits announced their responsibility for a cyberattack against FromSoftware's parent company, Kadokawa. They claimed to have pilfered extensive data, including business strategies and user-related details. On July 3, Kadokawa acknowledged the breach, confirming that it compromised the personal data of all Dwango employees, internal documents, and certain information from employees at affiliated companies.
According to Gamebiz, this security breach cost Kadokawa Corporation approximately 2 billion yen, or around $13 million, leading to a 10.1% decrease in net profit compared to the prior year. Nevertheless, Kadokawa reported robust financial outcomes for the first quarter of the fiscal year ending June 30, 2024. This marks the company's first financial disclosure since the significant cyberattack on June 8, which temporarily disrupted several services.
Fortunately, Kadokawa's business operations have now fully recovered. In the publishing and intellectual property creation sectors, shipping volumes for affected publications are expected to gradually rebound in August, with daily shipments projected to return to normal by mid-August. Several major web services that were affected are also on track to resume normal operations.
The company's video game sector, however, has seen remarkable growth. Sales reached 7,764 million yen, marking an 80.2% increase from the previous year, and ordinary profit surged by 108.1%. This exceptional performance can be largely attributed to the success of Elden Ring and its Shadow of the Erdtree DLC, which significantly boosted the gaming division's results.
