Nintendo plays down Pokemon Go upside - Mobile World Live

Nintendo plays down Pokemon Go upside

26 JUL 2016

Pokemon Go will have a “limited” impact on Nintendo’s financial performance, said the company, souring early optimism among investors following the successful launch of the augmented reality app.

After debuting in the US earlier this month, Pokemon Go has been rolling out worldwide, including Nintendo’s home market of Japan at the end of last week.

Its early success led to Nintendo’s share price almost doubling, adding $17.6 billion in market capitalisation, and even surpassing electronics rival Sony in terms of market value at one point.

However, in a statement Nintendo pointed out that it only actually owns 32 per cent of The Pokemon Company, which has worked in collaboration with US-based Niantic Labs to develop and distribute the mobile game application.

“The Pokemon Company is going to receive a licensing fee as well as compensation for collaboration in the development and operations of the application,” said Nintendo.

“The Pokemon Company is the company’s affiliated company, accounted for by using the equity method. Because of this accounting scheme, the income reflected on the company’s (Nintendo) consolidated business results in limited.”

Nintendo added it would not modify its annual forecast taking into account the current situation, and that it had also already factored in revenue from Pokemon Go Plus, a wearable accessory for the game, in its current guidance.

Speaking to Bloomberg, Macquarie Securities analyst David Gibson said that while Nintendo has stakes in both Niantic, the game developer, and the Pokemon Company, it holds “an effective economic stake” of just 13 per cent in the app itself.

Reports suggest that Nintendo’s initial huge stock bump was fueled by investors’ misguided belief that Pokemon Go was solely created by Nintendo, and the Japanese gaming giant would reap the bulk of the benefits.

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Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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