In its new mid-term management plan for 2031, Kadokawa has openly acknowledged that its very success has become its downfall. The Tokyo-based conglomerate is now blaming an over-reliance on the isekai and narou-kei formulas as one of the major factors contributing to a 51.3% contraction in operating profit for the fiscal year ended March 2026.
After years of riding the wave of formulaic fantasy, Kadokawa found itself trapped by the very patterns that once made its stock price gleam. A modern publishing paradox. The company has identified this “excessive reliance on existing winning patterns” as a form of creative inertia, where a clear lack of depth in content diversity prevented its domestic publishing arm from exploring new territories or embracing riskier projects.
According to Kadokawa’s own analysis, the formulaic approach led to market saturation and a worsening of profitability across its core IP creation business—which itself saw a 51.6% year-on-year decline. The editor-in-chief has been candid: “The publication business was too comfortable in its success, unable to take on innovative projects without bearing the load.”
To tackle this crisis, Kadokawa is focusing on rebuilding what it calls its “genre strategy,” implementing stricter criteria for greenlighting new titles and establishing a Publication Steering Committee in November 2025. This body will implement “fundamental structural reforms” to ensure that editors can expand their catalogues without being bogged down by administrative overhead or staff limitations.
The irony doesn’t end there. In an effort to build what management describes as a “leaner and more efficient organizational structure,” Kadokawa has also announced an early retirement program for its workforce.
Starting June 1, employees aged 45 or older with at least five years of service will be solicited for voluntary resignations. Those who bite the bullet will receive an additional severance package on top of regular pay, along with optional re-employment support—a poetic send-off for veterans who helped create the very isekai empire they now seek to dismantle.
