Japanese media giant Kadokawa has reported a sharp drop in earnings for the fiscal year that ended in March 2026, with the company pointing to an over-reliance on popular but formulaic genres like isekai as a major part of the problem. The company’s consolidated earnings report showed a 51.3% decrease in operating profit compared to the previous year. Its core publishing and IP creation business took the hardest hit, recording a 51.6% drop in operating profits year-on-year.

In its newly published mid-term management plan covering fiscal years 2026 to 2031, Kadokawa identified “excessive reliance on existing winning patterns” as one of the key factors behind the decline. The company specifically called out a publishing bias toward proven genres such as isekai and narou-kei, a category of web novel-style stories that often overlap heavily with isekai. According to Kadokawa, this trend led to market saturation and shrinking profits, while also limiting the space for new or experimental projects to take shape.

The company also acknowledged that its efforts to grow its publishing output have backfired in part. In an attempt to release more titles without overwhelming its staff, Kadokawa brought on more editors and scaled up production. However, the report notes this contributed to a rise in titles that lacked originality or quality, compounding the problem rather than solving it.

To address these issues, Kadokawa says it will rebuild its genre strategy and apply stricter standards when deciding which projects move forward. The company also established the Publication Steering Committee in November 2025, framing it as a mechanism for driving structural reform across its publishing operations.

Separately, Kadokawa announced an early retirement program set to begin June 1. The program targets employees aged 45 and older with at least five years of service, and participation is voluntary. Those who choose to leave will receive an additional severance package on top of standard pay, along with the option to access re-employment support. The company described the move as part of building a leaner and more efficient organizational structure.