Elden Ring and its expansion, Shadow of the Erdtree, have emerged as a significant catalyst propelling the performance of its parent company, Kadokawa, in the gaming sector. Delve deeper to understand the impact of the recent security breach and Kadokawa's financial performance in the gaming industry.
Elden Ring and DLC are Powering Kadokawa’s Sales in the Game Sector
Kadokawa’s Security Breach Resulted in $13 Million in Losses
On June 27, the notorious hacking group Black Suits announced their responsibility for a cyberattack on FromSoftware's parent company, Kadokawa. They claimed to have pilfered extensive data, including business strategies and user-related information. On July 3, Kadokawa confirmed the breach, which compromised the personal data of all Dwango employees, internal documents, and certain information from employees at affiliated companies.
According to Gamebiz, the security breach incurred a cost of approximately 2 billion yen, equivalent to about $13 million, and resulted in a 10.1% decrease in net profit compared to the previous year. Despite this setback, Kadokawa reported robust financial results for the first quarter of the fiscal year ending June 30, 2024. This was Kadokawa's initial financial report following the significant cyberattack on June 8, which had temporarily disrupted various company services.
Fortunately, normal business operations have been fully restored. In the publishing and IP creation sectors, the shipment volumes for affected publications are projected to gradually recover in August, with daily shipments expected to return to normal by mid-August. Additionally, several major web services that were affected are scheduled to resume regular operations soon.
The company's video game sector, in particular, has shown remarkable growth, with sales reaching 7,764 million yen—a staggering 80.2% increase from the previous year—and ordinary profit surging by 108.1%. This impressive performance is largely attributed to the success of Elden Ring and its Shadow of the Erdtree DLC, which have significantly boosted the gaming division's results.
