‭【NEWS RELEASE】‬‭June 14, 2024‬‭KADOKAWA CORPORATION‬[‭ Second Report]‬‭System Failure Affecting the KADOKAWA Group‬‭ KADOKAWA CORPORATION (Headquarters: Chiyoda-ku, Tokyo; CEO Takeshi Natsuno; hereinafter‬‭“KADOKAWA”) expresses deep apologies for the significant inconvenience and trouble caused to its readers,‬‭users, writers, creators, business partners, shareholders, investors and other stakeholders by the system failure‬‭currently affecting the KADOKAWA Group.‬‭ KADOKAWA is currently considering solutions and workarounds quickly on a company-wide basis in order to‬‭restore the systems and resume normal operations.‬‭The reason for the system failure and progress of the investigation, as well as the latest situation including the‬‭extent of the impact on key businesses and operations and future actions are as follows.‬‭1. Reason for the system failure and progress of investigation‬‭ At around 3:30 am on Saturday, June 8, several servers of the KADOKAWA Group became inaccessible. An‬‭internal investigation urgently launched in response to the failure confirmed that the servers housed in the‬‭KADOKAWA Group's data center had been subjected to a large-scale cyber attack including ransomware‬‭attacks, targeting Niconico and the related services. That same day, KADOKAWA established a task force, which‬‭has since been investigating the incident and taking action, aiming to gain a full picture of the state of the‬‭damage and restore the systems.‬‭ KADOKAWA has taken emergency measures to prevent the escalation of damage and protect data integrity‬‭such as immediately shutting down the data center servers. Through these measures, other services offered by‬‭the Group that utilize the data center, in other words, not only several websites of the KADOKAWA Group but‬‭also some functions of core systems that manage business activities and accounting functions have also been‬‭suspended.‬‭2. Impact on business and operations‬‭●‬ ‭Publication businesses :‬‭○‬ ‭The functions of the domestic paper-based book order receipt system and digital manufacturing‬‭factory and distribution system have been suspended. This has led to suspension of the receipt‬‭of orders, reduction in production volume and distribution delays, resulting in a decline in‬‭shipment quantities.‬‭○‬ ‭Some functions of the editing and production support system of the domestic paper-based book‬‭and e-book have been suspended, and it is expected that publication of the existing paper-based‬‭books and some new publications (paper-based books and e-books) will be delayed.‬‭●‬ ‭Web Services:‬‭○‬ ‭All Niconico family services including Niconico Video, Niconico Live Streaming and Niconico‬‭Channel have been suspended and users are not able to log into external services through their‬‭Niconico account.‬‭●‬ ‭Merchandise businesses :‬‭○‬ ‭Several online shops operated by KADOKAWA have been unable to receive orders for products‬‭or some shipments have been delayed.‬‭1‬‭●‬ ‭Accounting functions :‬‭○‬ ‭The accounting system has also been affected by the system failure, and the payment system‬‭stopped functioning temporarily. Because of this, payments to some business partners may be‬‭delayed.‬‭ The situation with regard to the leakage of information is currently under investigation. While no leakage of‬‭personal information, credit card information, etc. has been confirmed as yet, investigations are still ongoing.‬‭This matter has already been reported to the Personal Information Protection Commission in Japan.‬‭3. Future actions and expectations for resumption of service‬‭ KADOKAWA is currently putting all its effort into identifying the extent of the impact in more detail and restoring‬‭the systems, with the aim of getting all businesses and operations that have been affected to recover as soon as‬‭possible. Above all, the restoration of the accounting functions, which are fundamental to business activities, and‬‭the normalization of manufacturing and distribution functions in the Publication businesses, which generate‬‭considerable revenue, are the top priorities, and KADOKAWA plans to gradually achieve this from the week of‬‭June 17, aiming for the establishment of a safe network and server environment and the restoration of core‬‭systems by the end of June this year.‬‭ As for recovery of the Niconico services, the system will need to be rebuilt in a safe environment and recovery‬‭is expected to take at least one month, though the exact timing depends on the results of the investigation into‬‭the extent of the damage. Services will be resumed gradually as and when circumstances allow.‬‭ Meanwhile, KADOKAWA Group will do whatever it can to continue providing its products and services,‬‭including establishing alternative means, to minimize the impact on its business.‬‭4. Impact on business performance‬‭ The impact of this matter on KADOKAWA Group's business performance in the current fiscal year is unclear at‬‭this moment. KADOKAWA will examine the impact carefully and will make an announcement promptly if any‬‭matter that should be disclosed occurs.‬‭ KADOKAWA Group will provide further updates on the status of recovery or countermeasures if more detailed‬‭investigation discovers new facts that ought to be shared.‬‭ Aiming to restore systems as quickly as possible, the KADOKAWA Group will continue joining forces and doing‬‭everything in its power to get systems and business activities running normally again. ‬‭ KADOKAWA reiterates its deepest apology to its customers and all those concerned for the considerable‬‭inconvenience and trouble this matter has caused.‬‭[Video Message]‬‭●‬ ‭Apology and Notice Regarding System Failure Affecting the KADOKAWA Group‬‭Takeshi Natsuno (CEO of KADOKAWA CORPORATION)‬‭●‬ A‭ pology and Outlook Regarding Suspension of Niconico Services‬‭Shigetaka Kurita (Representative of Niconico, Director COO of Dwango Co., Ltd.）‬‭Keiichi Suzuki (CTO of Niconico Service Headquarters)‬*‭ Please note that their messages are Japanese only, and YouTube’s automatic translation feature is‬‭helpful to understand the contents.‬‭End of document‬‭For media inquiries, please contact:‬‭Investor and Public Relations Division, KADOKAWA CORPORATION‬‭Email:‬‭pr-dept@kadokawa.jp‬‭2‬