Introduction

In 2026, Kadokawa, one of the biggest publishers in the manga and anime industry, reported a major drop in profits. Much of that was attributed to its continued focus on isekai stories, which led to a significant 51.3 percent decline in operating profit compared with the previous fiscal year.

Kadokawa's situation

Kadokawa's latest financial report for the period ending in March 2026 points to a worrying trend. The publisher blamed the decline on its "excessive reliance on existing winning patterns," with isekai-style works taking a prominent place. That has resulted in an oversupply of titles that are not only unoriginal, but also not especially high quality, making it harder to create new breakout hits.

The effects of the isekai boom

The rise of the isekai genre has grown in popularity over the past few years, with titles like "A Harem in a Fantasy World Labyrinth" and "The Daily Life of a Middle-Aged Online Shopper in Another World" flooding the market. However, Kadokawa's strategy of pushing these and similar titles has led to saturation in the genre. The publisher has found that, despite the large amount of content produced, none of the new titles has truly broken through.

Signals from the industry

Kadokawa's situation reflects broader trends in the entertainment sector. Gaming is going through a similar shift, with more developers and publishers, such as Sony, rethinking their strategies around live-service games. While interest in isekai and live-service titles was once high, both now appear to be entering a period of stagnation.

In the gaming industry, many major names such as Amazon and Sega have shut down live-service projects amid fading interest and financial setbacks. This comes alongside a global drop in consumer confidence driven by market changes.

Reflection on the future

The future of isekai and live-service models looks uncertain. As consumers become more demanding and look for higher-quality, more innovative content, companies will need to adapt to changing market expectations. Kadokawa faces a major challenge in revising its strategy and finding ways to move beyond current industry trends. Whether that reset will lead to a new wave of creativity within the isekai genre remains to be seen.

Given these developments, we can only hope the industry recovers with more focused and original content. Competition, both within and outside the sector, could help create a healthier market in which both buyers and creators benefit.