KADOKAWA CORPORATION Summary of Consolidated Financial Results for the Year Ended March 31, 2024

kadokawa’s latest fiscal report was sent out yesterday, which is the yearly cue for all of us on the periphery to do a bad job of interpreting balance sheets and line items for the franchises we cheerlead. oshi no ko is stupidly successful. precure may have finally recovered from hitting the bottom. ultraman’s probably going to be alright. what I’m really here to check, though, buried deep down in the conglomerate catacombs, is what numbers will fill in my mad libs template describing the niconico slide this time.

Premium subscribers have fallen to 1.17 millionBAD from the 1.31 millionLESS BAD reported last year. There was a 77%OUCH decline in operating profit.

numbers like this are, by now, pretty usual. as a subsidiary of something much larger, though, established through a merger about as well imagined as the media integration paradise promised by time warner and AOL colliding, the numbers never really do matter all that much, whether they exceed expectations or they don’t. you might spend eight years on an extended timeline modernizing your service, doing much needed architectural plumbing even as you shed subscribers through every successive quarter, or your parent company might decide at any point that the contraction is too much to tolerate and shut the whole thing down without ceremony so dwango can get back to running some anison event and teaching kids about touhou or something instead. that’s life under the corporate regime, where there is a hammer waiting overhead ready to squash the whole thing if you turn into too much of a footnote on an earnings report.

as much as I joke about nico slowly sinking into its own grave, kadokawa muscle is what has given it the clearance to recover a lot of tech debt that it wouldn’t have the runway to otherwise, like adding a crowdfund creator support system, eliminating economy mode, and transitioning their on-site media cluster to a cloud solution that enables uploaders to finally post videos in HD longer in thirty minutes. even as this is true, nico’s perception, and I would agree with it also being its problem, is that it is still playing perpetual catch-up with global services that have developed and adapted more quickly alongside it. users don’t really tolerate a decade of promises to stick around for potential improvements, and if they do, they age into being the only audience left. still, there is an ambition left in the site that feels all too loyal to its initial vision as a cultural hub for fringe content for me to think it is still not shooting to reclaim its former glory as a portal, unlike other services that have gone into maintenance hibernation. some of the quirkiness has been shed along the way, the sort of intangible that can never show up on a balance sheet, but the heart of it has mostly survived. while you may not be able to order pizza with a slash command anymore (give my regards to everquest), at least you can receive the direct viewer funding to knead the dough and bake one yourself while pretending you’re akari.

the last six months have threatened to flush all of that effort without much warning. now that visa has followed mastercard and american express in suspending payments for premium subscriptions, it feels more likely that we’re witnessing an extinction event that’s catastrophic rather than the sort of slow bleed it has endured so far. premium going up in price, I joked at the time, was like reminding people that they payed for the streaming video equivalent of dial-up. premium has indeed lost most of its utility as features like higher qualities have become standard offerings, yet it is still the grandfathered revenue for nico today, even as it has invested heavily in revamping its virtual currency and attempting to court creators back to the site to take on channel memberships. these three processors, with visa added, now account for a majority of all payments processed in japan, and it is still too early for us to tell how shutting them out may reflect completely, but undoubtedly many subscriptions are now going to expire swiftly without the promise of being offset by newer revenue streams that nico continues to place most of its hopes in. japan may be rich with cashless payment alternatives, and there are generally credit card loopholes when you are eager enough to jump through them, but this is a situation that, without much hyperbole, spells specific doom for nico, as it has already been operating on borrowed time up until now.

it’s tempting to look at nico, DLsite, patreon, and others being gated off through a lens of blind puritanism, not helped by most of these credit card announcements being explained by “various circumstances” that allow speculation to run wild, but I’d encourage people to dig deeper than viewing this as a flare up of moral panic being carried out by a handful of executives. visa has effectively been forced to become a defacto arbiter of obscenity not because it is easier to catch up to every service’s moderation practices, or enjoyable to play content cop, but because visa is now party to mindgeek’s crimes in a way that threatens the assumption that processors behave as common carriers. visa, in this case, proved they have the agency to change what a site hosts when it’s aware of what’s being published on it by simply asking for a removal, which they successfully achieved for CSAM uploads to pornhub. one judge has found that fact convicing enough, and by finding visa liable enough for standing, has already damaged a defense of potentially illegal content being a consequence of untamable societal ill that processors have long relied on to excuse themselves before. independent of the age gates and compelled warnings for porn websites being passed by many state legislatures, this more chiefly gets to why lolibaba is now labeled ひよこババア on DLsite, and why a cat video based on an ancient 2ch copypasta was wiped from nico unceremoniously: processors are being weaponized to fight the harms of front-of-mind topics like CSAM, artificial non-con material like deepfakes, and terrorism that approaches like section 230 challenges have been unsuccessful at correcting through the courts, and we are now beginning to see the knock-on effects of processors that have woken up to a threaded needle of jurisprudence where they must answer to content with full scrutiny. although we have gone through an extended period of expression where obscenity law has remained largely unenforced, it is still a classification as old as dirt that is still legally active, and it is why pixiv has now been made to toe the line by quoting the miller test verbatim in its new terms of service; lolisho, and other fringe elements that have always questionably satisfied these prongs, are likely more accurately to be the collateral damage that will be incurred by now having to enforce these criteria, rather than the main targets of attention. unlike with sex workers (see FOSTA-SESTA), or teen advocates (see KOSA), though, there are not many voices that are likely to stand up to temper anything in defense of the humble hypnosis nukige or inmu edit.

closing this out with a small bit of trivia, did you know nico used to offer their own visa card back in 2012? the benefits for it only ended in 2017! at last year’s chokaigi, they even offered a JCB card instead, once the butt of endless jokes for being inferior to visa. as atena-chan of DLsite mascot pride has suggested, JCB may just become the card of choice for otaku refugees in the end if its reputation continues to hold. I have to agree with our english-speaking japanese friend on this one: this must be a masonic conspiracy.