Elden Ring Expansion Rejuvenates FromSoftware

Elden Ring and its Shadow of the Erdtree expansion pack are key drivers behind Kadokawa Corporation's robust first-quarter gaming sector performance, effectively offsetting the impact of a significant cyberattack. Let's delve into the details of the security breach and the company's financial report.

Kadokawa's Cyberattack and Financial Fallout

On June 27th, the hacking group Black Suits claimed responsibility for a data breach targeting Kadokawa, FromSoftware's parent company. The stolen data reportedly included business strategies and user information. Kadokawa subsequently confirmed the breach compromised Dwango employee data, internal documents, and some information from affiliated companies. This incident resulted in approximately ¥2 billion (roughly $13 million) in losses and a 10.1% decline in net profit year-over-year.

Despite the cyberattack's impact, Kadokawa reported strong first-quarter (ending June 30, 2024) financial results. This is the company's first financial report since the June 8th cyberattack, which temporarily disrupted various services. Business operations have since fully resumed. While publishing and IP creation sectors are recovering gradually, with full recovery anticipated by mid-August, the video game sector thrived.

Elden Ring's Resounding Success

The video game division saw remarkable growth, achieving sales of ¥7,764 million—an impressive 80.2% increase compared to the previous year. Ordinary profit in this sector surged by 108.1%. This exceptional performance is largely attributed to the phenomenal success of Elden Ring and its Shadow of the Erdtree DLC, which acted as a powerful catalyst for the gaming division's growth. The games clearly mitigated the financial effects of the cyberattack.