KADOKAWA ANNUAL REPORT 2003

Kadokawa movies was established as a brand of Kadokawa Shoten Publishing after the Kadokawa Bunko series. Since 1997, production committees have played a prominent role in creating a new breed of Kadokawa movies by winning financing from investors to spur new business development. Numerous titles have been added to the Kadokawa lineup. These are sold widely on video and DVD, as well as distributed to broadcasting media. Significantly, the start of BS and CS digital broadcasting in Japan, which has seen a dramatic increase in the number of channels, has been a boon for this business. And today, at the dawn of the full-fledged broadband era, demand for video content is continuing to expand. This spells real growth opportunities for Kadokawa movies.
The launch of Kadokawa-Daiei Pictures as a new business following the acquisition of the operations of Daiei Co., Ltd. in November 2002 was another move designed to bolster movie operations. The acquisition of the rights to such acclaimed films in Japan as Daimajin and Gamera has strengthened the Kadokawa Group’s film-making activities and better positioned us to realize our vision for the future. As part of the deal, we also took over an extensive film library of 1,600 titles that includes a number of classic Japanese titles. Along with Daiei’s operations, we inherited a large film studio covering 11,624 square meters, giving us in the process an integrated ability to make movies right from the planning stage. And by integrating the operations of Kadokawa Shoten Publishing’s Entertainment Dept. with those of Kadokawa-Daiei Pictures, we took an important first step toward making the Kadokawa Group’s video software business more efficient and viable.
A noteworthy development during fiscal 2003 was the nationwide release of the ring in the U.S. in October 2002. Opening at around 2,000 cinemas, the ring, a remake by Steven Spielberg’s renowned film studio DreamWorks SKG of our 1998 blockbuster RING, quickly soared to the top of the movie rankings on debut and grossed roughly U.S.$15 million in just its first 3 days. The movie ended up taking approximately ¥15 billion in the U.S., and around another ¥2 billion at the box office in Japan. DARK WATER, another Kadokawa movie based on the works of Koji Suzuki and directed by Hideo Nakata, is also destined to be released worldwide. The movie will be screened at Disney-affiliated cinemas. Calls in Hollywood for a “second” the ring provide further evidence of the growing interest in Japanese movies.