Yesterday, 4Kids announced that Konami subsidiary 4K Acquisition Group entered the fray in the company’s bankruptcy auction. 4K Acquisition made a competing bid last week against stalking-horse bidder Kidsco Media Ventures’s initial bid. After a number of competing bids between the two companies, the auction was halted, to allow the two companies to negotiate an agreement that would split 4Kids’s assets between them.
It’s not surprising to see exactly why Konami wants to claim the US rights to 4Kids’s holdings on the property. As the Japanese distributor and licensor of the card game, there is value in the rights on the block, In particular, this includes “business relating to and commercial Use of Yu-Gi-Oh!, including the rights granted under the Yu-Gi-Oh! Grant Agreements, all other Purchased Assets relating to Yu-Gi-Oh!, The CW Block and [4Kids’] right to Use and profit from the foregoing and the Yu-Gi-Oh! Related Intellectual Property, the Yu-Gi-Oh! brand, and Yu-Gi-Oh! Productions.”
So, basically, any and all American licensing of the Yu-Gi-Oh! brand and TV series.
Should Konami will, they would have full control of the property in the lucrative western market. And, rather than collecting royalties through various middlemen, they will reap profits more directly via sales of product and agreements via distributors like CW, who airs 4Kids’s programming. Of course, a humorous bit of irony does arise in the situation, as Konami will still be paying licensors TV Tokyo, ADK, and Nihon Ad Systems to use what is, essentialy, their own property. Of course, that’s not entirely true – it still belongs to the parties of TV Tokyo, ADK, and Nihon Ad, as the TV show is a licensed product created by the three current licensors. A Konami purchase, in this case, would instead create a far more interesting path in which money changes hands. Essentially, Konami, as licensor, would pay TV Tokyo, ADK, and Nihon Ad as part of the existing agreements in place. These partners would then take a portion of this payment, and forward it to Konami’s Japanese division, as a cost of maintaining the license and doing business.
Of course, I don’t expect it to get to that point just yet.
Currently, the results of the negotiations are anybody’s guess. Since Kidsco Media has enough of an interest in the property to continue bidding, there’s little chance that they’ll walk away from negotiations. As stalking horse, Kidsco has a bit of leverage to sway negotiations to a point where they get an agreeable portion of what they want, or a sizable cash sum. In this case, I wouldn’t be shocked if they fight tooth and nail to get a portion of the Yu-Gi-Oh! pie, which has proven to be a money maker time and time again. On the other side of the equation, though, Konami has incredibly deep pockets. They can afford to go into a protracted negotiation session and dig in a bit, with little repercussion. It will be interesting to see just how things play out as negotiations progress. At this point, though, there isn’t enough inforation to formulate an accurate final prediction.